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June 2022: Iceland’s busiest tourist month in nearly three years

More tourists visited Iceland in June than in any single month since autumn 2019. The tourism industry is regaining its pre-pandemic ranking as Iceland’s #1 export sector. The outlook is for around 1.6 million tourist arrivals in 2022 as a whole.

Foreign nationals’ departures via Keflavík Airport topped 176,000 in June, according to recently published figures from the Icelandic Tourist Board. This made June the busiest month in terms of visitor numbers since September 2019, a scant half-year before the COVID-19 pandemic struck worldwide, laying waste to tourism in Iceland and elsewhere. A comparison of June data over the past decade shows that this year’s tourist arrivals came to 90% of the June 2019 total, making last month the fifth-strongest June since the tourism boom started.

In terms of nationality, the composition of the group of tourists visiting Iceland has changed markedly since the pandemic struck. Visitors from the US have comprised a somewhat larger share of tourists in the past two years than they generally did during the years beforehand. This June, Americans accounted for just over 30% of all arrivals, far outnumbering other nationalities. Next in line were visitors from Germany (12%), France (6%), the UK (6%), Poland (4%), and Italy (4%), while visitors from the Nordic countries accounted for a combined 10% of arrivals.

In comparison, Americans accounted for just over 23% of visitors in 2019, and Germans accounted for just under 7%, while British and Chinese visitors accounted for just over 13% and 7%, respectively. There have been few Chinese tourists in Iceland since the onset of the pandemic, as the Chinese authorities have maintained tight restrictions on travel to and from the country. In H1/2022, only 1.5% of tourists visiting Iceland came from China. It should be noted, though, that Icelandic Tourist Board data include visitors from Hong Kong and Taiwan with those from mainland China.

Americans appear to spend more in Iceland than many other groups do, so the proportional increase in tourists from the US is good news for revenues in the sector. According to a newly published report from the Icelandic Centre for Retail Studies, foreign tourists’ June 2022 payment card turnover in Iceland was the highest ever recorded in the month of June. Turnover came to just over ISK 28bn, some 38.5% of it from Americans. The recent appreciation of the US dollar versus other major currencies has boosted Americans’ purchasing power abroad, including in Iceland. In 2022 to date, the USD has strengthened by just over 6% versus the ISK, whereas the euro has fallen by nearly 6% and the pound sterling by nearly 7%.

Tourism back in first place

More than 391,000 tourists came to Iceland via Keflavík Airport in Q2/2022, making it the busiest quarter since Q4/2019. Obviously, increased tourist traffic brings stronger foreign exchange revenues with it. According to data from Statistics Iceland (SI), export revenues from travel and passenger transport by air totalled ISK 107bn in Q3/2021, and 370,000 tourists visited the country during the quarter. Furthermore, newly published numbers from the Centre for Retail Studies show that foreign tourists’ card turnover in Iceland came to just under ISK 62bn in Q2/2022, as compared with ISK 66bn in Q3/2021.

Based on these figures, it is reasonably safe to assume that tourism-generated export revenues in Q2/2022 were probably on a par with those in Q3/2021, as the number of tourists visiting the country was noticeably higher. In other sectors, export revenues from fishing and aquaculture totalled nearly ISK 101bn in Q2/2022, and revenues from aluminium exports came to ISK 104bn. According to all of this, tourism is rapidly regaining its former position as Iceland’s leading export sector. In fact, we expect it to pull ahead of fishing and aluminium in terms of revenue generation as soon as Q3.

Tourist numbers set to rise in the near future

In our most recent macroeconomic forecast, published in May, we projected that 1.5-1.6 million tourists would visit Iceland in 2022 – about the same number as in the mid-2010s, if our forecast materialises. We expect tourist numbers to rise to 1.9 million in 2023 and 2.1 million in 2024.

For this year, the May and June totals were somewhat above our projections, and the outlook for the latter half of the summer is also better than we had anticipated. As a result, we consider it likely that this year’s total will be close to 1.6 million, although as before, it is uncertain how quickly numbers will rise thereafter.

The slower increase further ahead is due in part to a higher real exchange rate, which will make Iceland more expensive in comparison with other destinations, and the prospect of weaker growth in global demand, which we expect to dampen consumers’ appetite and capacity for travel on both sides of the Atlantic. The global economic outlook has actually dimmed somewhat since we published our forecast, although fortunately, there is little or no sign as yet of reduced appetite for travel to Iceland.

In the recent past, travellers visiting Iceland have tended to stay longer than they generally did during the years before the pandemic. We think it quite likely that in the coming term, average revenues per tourist will be somewhat above the average of the past decade. This suggests that tourism will soon regain its position as Iceland’s leading export sector, and in our opinion, the rapid growth within the sector will play a major role in the flip we expect to see in the current account from deficit to surplus.


Jón Bjarki Bentsson

Chief economist