As usual, there was a sizeable surplus on travel, transport, and shipping. The surplus on cross-border travel measured ISK 46bn, while the transport- and shipping-related surplus was ISK 44bn. In both cases there was a marginal YoY increase in ISK terms. Other components of the services account generated a deficit of ISK 28bn, including ISK 21bn on the item called Other business services, which includes cross-border trade in various types of specialised, tech, and research-related services.

Tourism hits its summertime stride

Tourism accounts for a large share of the services account, as the figures above illustrate. According to SI data, the sector generated export revenues to the tune of ISK 166bn in Q2, the equivalent of a nearly 8% increase between years in ISK terms. Icelanders’ expenditures for overseas travel rose by more than 13% over the same period, to nearly ISK 77bn in Q2/2025. Icelanders have been keen to travel this year, with departures from Keflavík Airport up almost 22% YoY in the first seven months of 2025.

The summertime rebound in tourism after lacklustre activity early in the year has doubtless been a relief to many in the sector, shoring up Q2 export figures as well. Foreign nationals’ departures via Keflavík Airport were up more than 6% YoY in Q2, increasing by 7% in April, 1% in May, and more than 10% in June.

The surge in June has continued after the end of the peak tourist season, signalling positive developments in services exports for Q3. For example, monthly foreign nationals’ departures via Keflavík Airport broke the 300,000 barrier for the first time on record in July, hitting nearly 302,000, an increase of more than 9% YoY.

These figures should be interpreted with some caution, however, as they include foreign nationals who live in Iceland temporarily or permanently but are not tourists, plus a share of transit passengers who land in Iceland while travelling between Europe and North America. Even so, the numbers probably give a reasonably reliable overview of developments in tourist travel to Iceland.

FX generation broadens its base
Although tourism is the backbone of Iceland’s services exports and has reclaimed its position as Iceland’s leading export sector, it is worth remembering that other services also generate substantial export revenues. Chief among them are services classified as falling within the intellectual property industry, such as software development, entertainment, and research and development, to name a few examples. From July 2024 through June 2025, for instance, these other sectors brought in ISK 376bn in revenues. In comparison, export revenues from fishing totalled ISK 352bn, and revenues from aluminium exports came to ISK 340bn. Total revenues from foreign tourists amounted to ISK 640bn for the period.

The composition of Iceland’s export revenues has changed markedly in recent years, and revenue sources have increased in number. The conventional goods export sectors – marine products and aluminium – previously the main source of export revenues, accounted for a combined 35% of total exports over the twelve-month period specified above. Tourism was close on their heels, at 32%. Other services accounted for 19%, and goods excluding aluminium and marine products another 14%. In all, Iceland’s total export revenues came to about ISK 2,000bn between July 2024 and end-June 2025, with services bringing in ISK 1,015bn and goods ISK 981bn.

A healthier trade balance is a win-win situation

Although the Q2 surplus on services trade was a generous one, it was dwarfed by the deficit on goods trade. On a balance of payments basis, the goods account deficit for the quarter was ISK 135bn, the largest on record in ISK terms. Part of this fat deficit stems from unusually strong investment goods imports, which in turn stem mostly from data centre development. Furthermore, exports of goods other than aluminium and marine products were relatively weak in Q2. This is among the topics covered in the Central Bank’s (CBI) most recent Monetary Bulletin. CBI officials are of the opinion that changes in SI’s accounting – specifically, the distribution of pharmaceuticals company Alvotech’s export revenues between goods and services – may explain weaker-than-expected exports of pharmaceuticals and medical products.

In H1/2025, the deficit on combined goods and services trade was ISK 140bn, as compared with last year’s H1 deficit of ISK 60bn. This is certainly a marked turn for the worse, but it should be borne in mind that the aforementioned investment in data centres strongly affects this year’s figures. According to Monetary Bulletin, the CBI estimates that if data centre-related imports are excluded, the trade balance will be close to neutral this year. The bank also points out that data centre-related investment goods imports do not require an increase in foreign currency flows and therefore will not put pressure on the ISK exchange rate.

Next week the CBI is set to publish balance of payments figures through Q2/2025. In addition to the numbers above, next week’s figures will include data on the primary and secondary income balances. Presumably, the current account balance will be significantly negative in H1 as a whole. H2 looks set to be quite a bit more favourable, buoyed up by factors such as the strong peak tourist season and the prospect of reduced growth in imports of investment goods.