The Icelandic economy has been buoyant for much of the current decade, with GDP growth averaging 4.5% per year in 2013-2018. The growth episode has been underpinned by the boom in tourism, supported by other favourable factors that have fuelled growth in private consumption and investment. Domestic demand gradually took over from exports as the main driver of growth as the period advanced.
Figures for Q1/2019 show clearly that the economy is cooling. GDP growth measured 1.7% for the quarter. WOW Air folded its tent at the end of Q1, and the March-April month-end therefore marks a clear turning point in the domestic economy.