According to analysis by a government task force the bankruptcy of one of the two big Icelandic airlines would lead to a steep recession. Were WOW Air to collapse it would cause the GDP of Iceland to contract by 3% and the Icelandic currency, the Króna to drop by 13%.
The local business weekly Markaðurinn reports that the task force, which is manned by economists and experts from the Treasury, the Central Bank and the office of the Prime Minister, was formed to assess the threats posed to the Icelandic economy by a sudden reversal of fortune in the tourism industry. Due to rising fuel costs and the strengthening of the Icelandic Króna the two Icelandic airlines, Icelandair and WOW air are facing a tougher business environment. A second task force has been formed to draw up an emergency plan to respond to the bankruptcy of the two airlines.
The bankruptcy of WOW air could cause the export of Iceland to drop by as much as 10%, leading to a weakening of the currency and thus pushing up inflation to 6%. Up to 1,400 people would lose their jobs. This does not include the full ripple effects, according to the sources of Markaðurinn.
Read more: Number of tourism workers doubled since 2008 crash: 28% fewer work in finance, banking
According to analysis by a government task force the bankruptcy of one of the two big Icelandic airlines would lead to a steep recession. Were WOW Air to collapse it would cause the GDP of Iceland to contract by 3% and the Icelandic currency, the Króna to drop by 13%.
The local business weekly Markaðurinn reports that the task force, which is manned by economists and experts from the Treasury, the Central Bank and the office of the Prime Minister, was formed to assess the threats posed to the Icelandic economy by a sudden reversal of fortune in the tourism industry. Due to rising fuel costs and the strengthening of the Icelandic Króna the two Icelandic airlines, Icelandair and WOW air are facing a tougher business environment. A second task force has been formed to draw up an emergency plan to respond to the bankruptcy of the two airlines.
The bankruptcy of WOW air could cause the export of Iceland to drop by as much as 10%, leading to a weakening of the currency and thus pushing up inflation to 6%. Up to 1,400 people would lose their jobs. This does not include the full ripple effects, according to the sources of Markaðurinn.
Read more: Number of tourism workers doubled since 2008 crash: 28% fewer work in finance, banking
