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Tourism recovering swiftly from a two-year lull

After a turbulent two-year period featuring brief gusts of growth interspersed with pandemic-induced doldrums in tourism, the sector appears poised for a swift recovery. Tourist arrivals could number 1.5-1.6 million this year and around 2 million in each of the two years to follow.

According to recently published figures from the Icelandic Tourist Board, just under 103,000 foreign nationals departed Iceland via Keflavík Airport in April. As in recent months, British and American travellers were prominent among them, accounting for 16% and 17%, respectively, of the total. Next in line were visitors from Poland (11%), France (6), and Germany (6%). Our Nordic neighbours also made their presence felt, accounting for a combined 10% of tourist arrivals in April.

Departure figures from Keflavík Airport show that just over 340,000 tourists visited Iceland in the first four months of 2022, the largest January-April total since 2019. British tourists have been particularly prominent in this resurgence and have indeed been an important part of winter tourism in Iceland since well before the pandemic.

Tourism operators are upbeat about the coming summer and autumn. The status of bookings and the growing number of flights to and from Iceland suggest that this year’s tourist numbers could come to 80-90% of the 2019 total.

In our most recent macroeconomic forecast, we project that 1.5-1.6 million tourists will 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.

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.

Even though visitors were far fewer in 2021 than before the pandemic, they supported revenue generation by staying longer and spending more in Iceland than they generally have in the past. It is of vital importance that this trend should continue, and we think it quite likely that in the coming term, average revenues per tourist will be somewhat above the average of the past decade. Tourism will soon regain its position as Iceland’s leading export sector, and in our opinion, the rapid growth in tourism will play a major role in the forthcoming flip from deficit to surplus in the current account.


Jón Bjarki Bentsson

Chief economist