The services account balance was negative by nearly ISK 11bn in Q1/2021, the first deficit on services trade Iceland has seen since 2007. It is also an abrupt change from the quarters beforehand, when the services account was comfortably in surplus despite the collapse in tourism-generated services revenues.
There is no single reason for the unusually unfavourable services account balance in Q1. In the preceding quarters, however, there had been revenues from tourists who visited Iceland in July and August 2020, as well as significant revenues from intellectual property exports in the pharmaceuticals sector, and these two revenue sources explained much of the hefty services account surplus measured at that time. But in Q1 there was no such windfall to set things right.