As is frequently the case, Icelanders’ card use abroad accounted for the lion’s share of growth in January, increasing by 14% YoY in real terms, while card use in the domestic market rose by just over 2%. Card use within Iceland has lost pace somewhat in the past two months.

Fewer overseas trips, but continued growth card turnover abroad

January card turnover figures are interesting in that Iceland Tourist Board data show an 8% YoY decline in Icelanders’ foreign travel during the month. In other words, Icelanders are spending more in foreign markets, even though they are travelling less.

Card use overseas has been booming in the recent term. This is no great surprise, however, as Icelanders were very busy travelling in 2025. In fact, it was a record year for Icelandic nationals’ overseas travel, with over 694,000 departures via Keflavík Airport, breaking the previous record of 668,000, set in 2018. With some simplification, it can be said that each Icelander took an average of nearly two trips abroad last year.

The downturn this January could indicate that the cooling of the economy is making its presence felt, but it could also mean that the market may be saturated for the moment, particularly given how much travelling Icelanders did this past December. While it would be precipitous to draw sweeping conclusions from a single month’s data, it will be interesting to see whether the recent travel boom eases, how much it does so, if at all, and whether payment card turnover abroad develops similarly.

Payment card turnover balance still negative

The payment card turnover balance has been negative in recent months, and January was no exception. In January, turnover with domestic payment cards totalled just over ISK 31bn, while use of foreign cards in Iceland came to just under ISK 19bn, leaving a negative payment card turnover balance of almost ISK 13bn. This is not surprising, as Icelanders have been spending substantial amounts abroad at a time when the number of tourists visiting Iceland has fallen, as has their consumption while in the country.

Private consumption growth to lose pace this year?

Private consumption grew apace in 2025. In the first nine months of the year, it grew by 3.6% YoY, and indicators suggest robust growth in Q4 as well. A major factor in this was the surge in car purchases late last year, as households expedited their vehicle purchase plans before changes in public levies took effect at the year-end. At the end of February, Statistics Iceland (SI) will publish the national accounts for Q4/2025, and according to our macroeconomic forecast, published at the end of January, we project private consumption growth for the year at 3.8%.

Payment card turnover usually gives a reliable indication of developments in private consumption. Based on the most recent card turnover data, it can be assumed that private consumption is still growing, albeit at a less brisk pace than before. In the past two months, payment card use within Iceland has eased, but because the figures tend to fluctuate from month to month, it is best to wait and see whether this pattern continues.

In our macroeconomic forecast, we revised our year-2026 private consumption forecast slightly downwards, to 2.4%, owing mainly to the cooling economy and sluggish labour market. Furthermore, the fact that consumers expedited their car purchases in anticipation of the hikes in public levies will probably have a dampening effect on durables purchases in 2026. Further ahead, we expect private consumption growth to pick up again as the economy gains momentum. We project private consumption growth at 2.8% in 2027 and 3.1% in 2028.