Coronavirus Destroys Iceland's Post Crisis Tourism Dreams

In 2008 a crisis in Iceland led to the country deciding to avoid building its economy based on banks, now its latest big industry, tourism, is facing a new crisis as a result of the Coronavirus.

As Coronavirus spreads traders are becoming increasingly concerned about its effects on international travel and as a result, the Icelandic krona has experienced a wave of selling causing the currency to drop a third of its current market value. 

With tourism at the top of the economy in Iceland, it accounts for 50% of the export revenue and this latest potential hit could be devastating.

However, currency traders concede that in the wake of the Coronavirus outbreak it would be more unlikely to expect the krona not to fall in value. There is reasonable anticipation that there is going to be a fallout in terms of tourism to the region. 

It also means, according to Asgeir Jonsson, the Governor of Iceland's central bank, that production will be contracted and this will have to be reflected in changes to their monetary policy.

The bank next meets on 18th March, the current rate is 2.75% and Jonsson is confident that the country can withstand a temporary shock such as that experienced with Coronavirus without too many long term effects.