It is plain to see that payment card turnover in Iceland and turnover abroad follow two very different paths at the moment. While domestic card use rose by nearly 25% YoY in March in real terms, card use abroad declined by 4% . The latter contraction has only grown stronger in the recent term, too, as monthly overseas card turnover has been down by an average of 50% in the past year. It is hardly bold or prescient to forecast that foreign card turnover is set to rise again soon, but this will depend on vaccination efforts in Iceland and developments in the pandemic in other countries. That said, the boom in payment card use within Iceland reflects a strong shift of spending back into the local economy. Indeed, many domestic sectors have held their own despite the Corona Crisis, and some are flourishing as never before.
In Q1/2021 as a whole, real card turnover within Iceland grew 11% YoY, while overseas turnover shrank by 37%. Therefore, total household card turnover – domestic and foreign combined – grew by 2.8% in real terms in Q1.
COVID in the driver’s seat
To a large extent, payment card turnover figures have developed in line with the path of the pandemic within Iceland. The contraction in card use has been greatest when infection rates have been high. As a result, domestic turnover can be expected to gain steam in coming months, as more people get vaccinated and infection rates (hopefully) remain low in the country.