Turnover increased significantly in most industries in 2023 compared with the previous year.1 The tourism industry briefly became the largest industry in Iceland, growing by over 20% alongside real estate and construction. However, growth in the industry slowed down significantly during the last two months of the year.
Turnover in November-December 2023
Growth diminished in November and December of 2023 compared with the same months in 2022. Turnover was lower for half of all industries and increased beyond inflation (7,9%) in only 25% of industries. Turnover increased most in real estate, motor vehicle trade and construction but decreased most in manufacture of basic metals, utilities and certain technology sectors. Additionally, the tourism industry remained unchanged year over year, having grown steadily and significantly since the middle of 2021.
Turnover in real estate continued to grow and this time by 21% to 27 billion ISK in the period.2 Most of the increase was due to higher rent revenue from commercial real estate. The construction industry also experienced decent growth or 11% with most coming from 13% increased turnover in specialised construction activities. Construction of buildings grew to a lesser degree by 8%.
Turnover in the tourism industry was mostly unchanged at 121 billion ISK compared with the same months in 2022. The rate of growth (0,1%) was thus significantly below the year’s inflation. Passenger air transport grew by just 3%, accommodation by 6% and food and beverage service activities by 8%. On the other hand, turnover in renting and leasing of motor vehicles dropped by 14%, 10% in land and sea transport and 2% at travel agencies.
The manufacturing side of the economy experienced minimal growth as lower aluminium price caused turnover to drop in metals manufacturing for the seventh time in a row and this time by 16%. Turnover decreased by 7% in technology manufacturing (-6%) and services (-15%) with information and communications technology staying unchanged from a year ago. Manufacturing of food products grew by only 5% (with 2% in meat processing) while turnover in fishing, aquaculture and fish processing decreased by 1% (with 4% decline in fishing alone).
Sale of motor vehicles continued to be a bright spot with turnover growing by 14% to 57 billion ISK. Other retail industries fared less well with wholesale trade declining by 1% (9% drop in wholesale of construction materials) and retail trade growing by 6% (where there was also a 10% drop in retail sale of hardware, paints and glass). Turnover in supermarkets and convenience stores increased by 11% while pharmacies and drug stores grew by 9% and clothing, footwear and leather goods store grew by 6%.
Total turnover for 2023
Most industries experienced growth in turnover for the year 2023 as a whole. Of the main industries in the economy only two experienced a drop in turnover; manufacture of basic metals (-20%) and utilities (-2%). The greatest increase happened in real estate, tourism and construction. One half of all industries experienced turnover growth beyond the year’s inflation which came in at 8.8%.
Turnover increased by 28% in real estate to be 146 billion ISK compared with 115 billion in 2022. This was largely due to higher rent revenue from commercial real estate. Significant increase in that area of the industry due to general growth, tourism and other activities contributed to the rise in turnover along with rent rates generally being indexed to inflation. The construction industry furthermore experienced 19% growth in turnover.
The tourism industry, which had become the second-largest industry in 2021, briefly became the largest one in July-August 2023 when it recorded an all-time high turnover of 230 billion ISK. In total, turnover for the year was 921 billion or 21% higher than in 2022 when it was 759 billion ISK. All sub-sectors of the tourism industry experienced significant growth during the year and the year’s turnover reached levels previously seen before the Covid-19 pandemic.
Few industries experienced decline in turnover during 2023. Most notable was a 20% drop in base metals manufacturing as the price of aluminium fell significantly having risen sharply during 2021 and 2022. Turnover in utilities was also 2% lower in 2023. Fishing, aquaculture and fish processing was mostly unchanged from the previous year but the fishing industry specifically contracted by 1% (with 9% growth in aquaculture weighing against the drop). The technology sector grew by 5% due to knowledge intensive high technology services thriving in 2023 and combatting the contraction in technology manufacturing.
Lastly, sale of motor vehicles continued to perform well with turnover increasing by 15% from 253 billion ISK in 2022 to 291 billion in 2023. This was the third year in a row with turnover in the industry growing by more than 10% year over year.
About the data
Data for turnover according to VAT reports is preliminary. All numbers are in nominal terms unless otherwise specified. Inflation was 7.9% during the period of November-December 2022 to November-December 2023. Inflation for the year 2023 was 8.8%.
Revisions: At the time of our last press release for the period September-October 2023 VAT-turnover was estimated to have been 1,190.1 billion ISK (+6.7%). Following a review with more data available the turnover is estimated to have been 1,186.7 billion ISK (+6.4%).
This publication for November-December 2023 does not include numbers for agriculture during this period and the year 2023, specifically “Crop and animal production, hunting and related service activities” and “Forestry and logging” since data from farmers is generally reported biannually (and included in turnover for May-June and November-December) and filing deadlines happen later than in other industries.
Consequently, data for the sum category “Total” is also not included for November-December 2023 and the year 2023 until all numbers have been reported. However, data is published for “Total excluding agriculture and forestry”.
1 Many farmers report VAT biannually, in accordance with paragraph 31 of the VAT-laws and have longer reporting deadlines. Data on VAT-turnover in these activities during the second half of 2023 are not yet available.
2 The real estate industry includes buying/selling of property, commercial and residential leasing, renting of land and land rights, brokerage and property management. Commercial leasing is by far the largest part of the real estate industry. Rental revenues of real estate firms are generally indexed to inflation.
Statistics
The tourism industry
All economic activities