Icelanders Unfazed by Slowdown in Economic Growth Engine

(Bloomberg) -- Iceland’s tourism industry is forecasting a first drop in visitors in a decade amid trouble at its airlines. But market operators say the predicted slowdown in the country’s biggest export market is not as severe as some had feared.

According to airport operator Isavia, passenger numbers at Keflavik International Airport will fall 8.7 percent this year, from 9.8 million to 8.95 million. With low-cost carrier Wow Air forced to cut flights and sell plans, the biggest reason for the drop is fewer connecting flights. Overall tourist numbers are expected to fall 2.4 percent from last year’s peak.

Icelanders Unfazed by Slowdown in Economic Growth Engine

Erna Sverrisdottir, an economist at Arion Bank, described this week’s forecast as “positive news,” considering the “uncertainty about flight supply to Iceland.”

Read more on Wow Air’s troubles

Sverrisdottir sees no major impact on the industry and argues that the recent weakening of the krona might help “counterbalance” the drop.

According to Bjorn Oli Hauksson, Isavia’s chief executive officer, Icelandic airlines still have margins to grow above the predicted global increase in airline numbers of 1 to 3 percent and has renewed his calls to expand the island’s main airport “as soon as possible.”

©2019 Bloomberg L.P.