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Elham AbolFateh

Tourism

Icelanders in Shock as Tourism Collapse Halts Economic Miracle

Thursday 20/June/2019 - 11:00 AM
Man and girl set
Man and girl set on an island
Edited By: Ahmad El-Assasy
Gudrun Asta Gunnarsdottir found herself at ground zero of Iceland’s latest crisis. Four months into her second pregnancy، the 33-year-old check-in desk operator was told she was one of 315 workers being laid off at Reykjavik’s international airport، according to "Bloomberg".

The news came as “a shock” and “caused a lot of sadness for everyone، especially because a lot of people are now looking for work at the same time،” said Gunnarsdottir، who was able to return part-time to her airport job.

The collapse in March of Wow Air is sending ripples through the tiny north Atlantic island، whose spectacular recovery from financial collapse a decade ago was built to a large extent on attracting foreign visitors، thanks in part to its location for the filming of popular television series like Game of Thrones.

The sudden cut in supply caused by Wow Air’s bankruptcy، coupled with high prices and a general drop in demand as a result of a global slowdown، mean the latest numbers look dire. Visitors plunged 24% in May from the same period last year and the all-important summer season is looking shaky. The central bank last month pulled the emergency lever to cushion the blow and delivered a half a point rate cut، while the government has pledged to boost stimulus if needed.

“We are prepared for the possibility of a deeper recession، and the numbers we are getting on tourist arrivals seem to indicate that that may happen،” central bank Governor Mar Gudmundsson said in an interview in Dubrovnik.

Sharp Downturn
After 20 quarters of uninterrupted growth -- the longest upswing in its recent history -- Iceland is bracing itself for a sharp downturn. Forecasts for 2019 vary widely، with Arion Bank predicting a slump as deep as 1.9%، but there’s a general consensus that the nation is facing its worst contraction since the financial crisis.

Unemployment، while still low in an international context، has risen to 3.6%. It was below 3% at the start of the year.

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