Iceland’s current account showed a deficit of 82.3 b.kr., or 6.8% of GDP, in Q2/2025. This represents a deterioration of 25.9 b.kr. relative to the previous quarter and 44.8 b.kr. relative to Q2/2024. The current account deficit was affected by investment related to data centre development, which caused a historically large deficit on goods trade measuring 135.2 b.kr., while services trade generated a surplus of 61.8 b.kr. (See Statistics Iceland website) The surplus on primary income was 3.9 b.kr., while the deficit on secondary income was 12.8 b.kr. (Table 1).
Table 1. Balance of payments
| B.kr. | 2024/2 | 2024/3 | 2024/4 | 2025/1 | 2025/2 |
|---|---|---|---|---|---|
| Current account balance | -37.4 | 44.2 | -91.3 | -56.4 | -82.3 |
| Balance on goods | -88.6 | -72.6 | -105.1 | -85.9 | -135.2 |
| Balance on services | 65.7 | 133.7 | 55.1 | 19.8 | 61.8 |
| Balance on primary income | -1.2 | -6.6 | -26.2 | 22.2 | 3.9 |
| Secondary income, net | -13.4 | -10.3 | -15.0 | -12.4 | -12.8 |
| Capital account | -1.2 | -0.3 | -1.0 | -0.8 | -0.9 |
| Financial account | 21.4 | 77.3 | -113.4 | 22.8 | -94.8 |
| Direct investment | 41.8 | -15.2 | -347.7 | -44.4 | -59.4 |
| Portfolio investment | 105.4 | 27.5 | 183.1 | 66.3 | -96.7 |
| Derivatives | 1.5 | -2.8 | -3.6 | 0.0 | -1.1 |
| Other investments | -106.0 | 69.9 | 45.7 | 6.5 | 16.4 |
| International reserves | -21.4 | -2.1 | 9.2 | -5.6 | 45.9 |
| Net errors and omissions | 60.0 | 33.4 | -21.1 | 80.0 | -11.7 |
At the end of Q2, the net international investment position was positive by 2,089 b.kr., or 43.9% of GDP, and deteriorated by 91 b.kr., or 1.9% of GDP, during the quarter. External assets totalled 6,762 b.kr. at the end of the quarter, and external liabilities were 4,673 b.kr. The position deteriorated by 95 b.kr. in Q2, owing to financing activities, as foreign assets increased by 97 b.kr. and foreign liabilities by 191 b.kr. Price and exchange rate movements during the quarter lowered asset values by 105 b.kr. and lowered the value of liabilities by 116 b.kr., thereby yielding an improvement of 11 b.kr. in the net external position. The króna appreciated during the quarter by just under 2.8% in terms of the trade-weighted index. Prices in foreign securities markets rose by 11.0% between quarters, and prices in the domestic stock market fell by 1.6%.
Table 2. Quarter-on-quarter change in international investment position
| Position at end-Q1/2025 | Financial account | Exchange rate and price changes | Other changes | Position at end-Q2/2025 | |
|---|---|---|---|---|---|
| b.kr. | |||||
| Foreign assets, total | 6,763 | 97 | -105 | 7 | 6,762 |
| Direct investment | 1,113 | -22 | -26 | 11 | 1,076 |
| Portfolio investment | 3,945 | 61 | -31 | 0 | 3,976 |
| Derivatives* | 20 | -1 | -4 | 0 | 15 |
| Other investments | 820 | 13 | -26 | -4 | 803 |
| International reserves | 865 | 46 | -18 | 0 | 893 |
| Foreign liabilities, total | 4,583 | 191 | -116 | 14 | 4,673 |
| Direct investment | 1,826 | 37 | -70 | 18 | 1,811 |
| Portfolio investment | 1,495 | 158 | -10 | 0 | 1,643 |
| Derivatives* | 9 | 0 | -2 | 0 | 7 |
| Other investments | 1,252 | -4 | -33 | -3 | 1,212 |
| Net international investment position (NIIP) | 2,180 | -95 | 11 | -7 | 2,089 |
| % of GDP | 45.8% | -2.0% | 0.2% | -0.1% | 43.9% |
*Other changes are included under price and exchange rate changes for derivatives.