Our newly published macroeconomic forecast includes a discussion of prospects for tourism in the coming term. We expect a marginal increase in visitor numbers this year, although it is uncertain whether this will materialise. The big picture appears to be that the industry has matured and is positioned for moderate growth in the period ahead. Presumably, emphasis will be placed on maximising added value, streamlining operations, and maintaining market share amid stiff international competition for visitors to the Far North. As a result, we project a nearly 2% increase in tourist numbers this year, followed by 3-4% per year in 2026 and 2027.

Pillars of exports increase in number

In a departure from the overarching pattern of the past 15 years, tourism will probably not be the top generator of export revenues during the forecast horizon. Instead, a number of sectors that have been gaining ground in recent years look set to take the lead.

Intellectual property is an umbrella term covering various sectors engaged in exportation of goods and services based on human resources and R&D. The intellectual property sector spans a broad range, from pharmaceuticals manufacturing to data centres, development of computer games, and production of television shows and films. A useful summary of key economic variables and activity in the sector can be found on the Federation of Icelandic Industries website. The intellectual property industry has seen rapid growth in the past several years. According to Statistics Iceland (SI), gross export revenues from companies in the sector totalled ISK 264bn in 2023. A recent Federation of Icelandic Industries estimate suggests that the sector generated over ISK 320bn in 2024, placing it on a par with fishing and aluminium in terms of its share in total export revenues. The outlook is for robust growth in revenues from intellectual property exports over the forecast horizon, and a goodly share of the overall export revenue growth we have projected in our macroeconomic forecast is due to these activities.

That intellectual property should contribute so strongly to export growth brings a number of benefits. For example, productivity in the sector is above the average for the economy as a whole, and as a result, employee compensation is generally higher than average, according to the Federation of Icelandic Industries. Furthermore, greater diversity in export revenues – both within the intellectual property sector and in comparison with other pillars of exports – reduces the risk that any given change in external conditions will cut deeply into export revenues and suddenly weaken the ISK.

Iceland’s aquaculture industry is also growing apace, especially land-based aquaculture. SI data show that the sector generated nearly ISK 54bn in export revenues in 2024. Although growth will probably fall short of the most ambitious plans, we still expect a decisive increase in export revenues from aquaculture during the forecast horizon.

Outlook for respectable export growth

Goods and services exports shrank by just over 2% in the first nine months of 2024. The capelin catch failure, electricity rationing to aluminium smelters, and a weak Q2 for tourism were the main reasons for the contraction. On the whole, we estimate that export volumes declined by 1% YoY in 2024. A quite respectable Q4 tourist season and growing exports of farmed fish and intellectual property offset the above-listed factors, although there was probably a marginal contraction in exports of both goods and services.

Nonetheless, the outlook is for decent growth in exports through 2027. Services exports will play a major role, but sectors other than tourism are likely to be the main drivers of the increase. The outlook is also for goods exports to pick up again, owing, for instance, to increased exports of various intellectual property-related and aquaculture products. In all, we project export growth at nearly 3% in 2025 and nearly 4% per year in 2026 and 2027.