Iceland Mag

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Iceland Mag

Economy

Growth of tourism continues to slow down: Grew by 3.2% in third quarter of 2017

By Staff

  • The geyser Strokkur erupting The continuiong eruption in the tourism industry is beginning to show signs of slowing down. Photo/Ernir.

The growth of the tourism industry continues to slow down. Analysis by economists with Landsbankinn bank shows that the industry grew at a slower pace during the third quarter than it has done in recent years. The industry grew by just 3.2% year-over-year in Q3 2017, compared to an average growth rate of 18.6% since 2010.

Blame the Króna
A major reason for the slower growth rate is the strengthening of the Icelandic currency, the Króna. The Króna has gained some 8% in value since the third quarter of last year, which means that each Euro or Dollar earned by tourism businesses generates fewer króna in revenue. 

Measured in fixed foreign prices the industry grew by 12%. This growth rate is also significantly below that reached in recent years.

Read more: Tourist spending down by 10% per visitor, "puffin shops" hardest hit

A stronger króna also means Iceland becomes more expensive to foreign visitors who have to spend more in their currency to buy the same quantity of goods or services in Icelandic króna. Many in the tourism industry have argued that the strengthening of the Króna is the primary reason foreign visitors are making shorter stops and taking shorter trips from Reykjavík, ignoring destinations further away from the city.

 

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