Iceland export growth almost all down to tourism

Tourism is almost entirely responsible for Iceland’s export growth over the past five years, with other sectors stagnating or contracting, a new study reveals.

A new report from the Iceland Chamber of Commerce compares how Icelandic exports have evolved with the findings and recommendations of a McKinsey & Company report on the Iceland economy from 2012.

The McKinsey report provides for export growth in the resource sector (which, as well as tourism, includes such things as agriculture, fisheries, and energy) of ISK 58 billion in the period 2011-15. Actual growth was ISK 90 billion (approx. €680 million), mostly generated by tourism.

Exports in the international sector – including such areas as food production, telecommunications and information technology – were supposed to grow by ISK 125 billion over the same period. Instead just ISK 4 billion was achieved.

The McKinsey report indicated that exports would need to grow by 4% a year over the period 2011-30 in order to achieve a corresponding rate of growth in the economy. This target has so far not been met, with almost all export growth coming from tourism alone.

The Iceland Chamber of Commerce report suggest that further export growth in the tourism sector could lead to a more uniform range of Iceland export types, with tourism dominating. Tourism accounted for 21% of all Icelandic exports in 2011 – this had risen to 31% just four years later.

Furthermore, investment in Iceland has been at historic lows and under the levels seen in neighbouring countries. Tourism accounts for almost all investment, while other sectors have fallen behind.