The same can be said of other fossil fuels and related products, which were imported to the tune of nearly ISK 28bn in October – a figure that corresponds, for instance, to more than a third of total goods export revenues for the month.
The jump in imported investment goods need not give cause for major concern, as the inputs brought into the country presumably boost economic activity in Iceland, including export activity, in the long run. As a result, the higher short-term cost of these inputs may well turn out to be a good investment. But the import boom also reflects both widespread price hikes and, to some extent, Icelanders’ recent appetite for consumption. In October, for instance, imports of generic consumption goods were up 13% YoY in ISK terms.
Divergent developments in aluminium and fish prices
As we have discussed recently, the price of Iceland’s leading export products has been quite volatile in the past few quarters. But in recent months, aluminium prices have sagged again, while marine product prices have held relatively high. The figures from October reflect this in part. Aluminium exports totalled a scant ISK 25bn, the lowest figure in ISK terms in nearly a year. Marine product exports, however, delivered the equivalent of nearly ISK 30bn in revenues in October, the equivalent of a 12% YoY revenue boost despite the reduced groundfish quota and a stronger ISK during the period. After adjusting for exchange rate movements, however, the increase measures 17%.