Key export sectors have a different tale to tell, though. In the fishing industry, the index for expectations six months ahead measures only 43, indicating widespread pessimism among survey participants. Presumably, the responses reflect the significant uncertainty dominating the sector at the beginning of summer, owing to the proposed hike in fishing fees, increased quotas for coastal fishing, the two-year capelin catch failure, and uncertainty about the global tariff environment. Executives in transport and tourism were more upbeat at the beginning of June, although their optimism had faded noticeably between surveys.

Business investment chugging along

Despite a high real interest rate, persistent inflation, and significant uncertainty in their operating environment both at home and abroad, domestic companies still appear to have a healthy appetite for investment. This, too, probably differs from one sector to another, however. The June survey did not include questions on investment plans, but the results of Gallup’s March survey line up quite well with the above-mentioned responses on corporate expectations in various sectors.

In general, executives were fairly geared up for investment in March, although the index value was 92, indicating that those planning to cut back on investment slightly outnumbered those planning to scale it up. In comparison with the previous survey on investment plans, which was carried out in September 2024, the index value fell by 15 points. As the chart indicates, though, the responses depended on whether the company concerned was engaged in exports or not. In short, appetite for investment picked up strongly among countries serving only the domestic market, while export companies’ investment plans showed a proportional decline between surveys. This can be seen in the responses from companies in fishing, on the one hand, and in tourism and transport, on the other.

Imports of generic investment goods are up markedly in 2025 to date, owing in large part to data centre-related investment. Commercial enterprises’ importation of passenger cars surged as well in the first months of the year, due to an increase in car purchases by rental agencies and other companies after last year’s lull. Our calculations indicate that, at constant exchange rates, imports of investment goods excluding ships and aircraft grew by 44% year-on-year in H1/2025. According to the CBI’s May issue of Monetary Bulletin, this increase is due for the most part to investment in the data centre sector. Furthermore, investment in land-based aquaculture is growing apace, and it looks likely that these two sectors will account for a sizeable share of this year’s growth in business investment.

Business investment set to contract in 2026

In our macroeconomic forecast from end-May, we explore the investment outlook for the coming term. This year, the outlook is for continuing growth in gross capital formation, with a healthy surge in business investment counterbalancing reduced residential and public investment. We expect total investment to grow by 3.7% during the year.

The jump in business investment is due primarily to large data centre and aquaculture projects. Data centre development has grown by leaps and bounds recently, and the first figures on 2025 imports suggest that the trend will continue during the year. On the other hand, there are signs that the boom will level off soon and that a contraction in data centre investment will pull business investment figures downwards in 2026. The outlook is also for continued investment in aquaculture in coming years, which will bolster business investment over the forecast horizon, but not enough to prevent a contraction next year.

The outlook for 2026 is for investment to shrink by 2.2%, with a 5% contraction in business investment partially offset by an uptick in residential and public investment. In the last year of the forecast horizon, we expect investment to gain steam again, boosted by lower real interest rates, and we project a growth rate of 3.7%, the same as in 2025.

There are numerous risks, both domestic and foreign, chiefly to include disruptions in world trade, increased domestic taxation of export sectors, and delays in energy procurement, which could significantly impede investment. Furthermore, persistent inflation and a high real interest rate could prove more intransigent than is currently hoped. The Icelandic Government has little control over the world trade situation, but hopefully it will conduct economic policy and the legislative process in such a manner that the latter risk factors will not hobble investment in the near future.