Russia’s Import Ban Likely Ineffective Against Iceland

Russia’s import ban against Icelandic products will likely not affect Iceland’s increasing stream of exports, the Central Bank predicts.

RÚV reports that, according to the new economic forecast from the Central Bank, Icelandic exports will – as they did last May – increase by 7% when compared to this same time last year.

While the Central Bank predicts that some 8 to 10 billion ISK will be lost due to Russia not buying Icelandic products (in retaliation for Iceland taking part in EU sanctions against Russia), countering this are lower production costs. In fact, it would have cost Iceland much more if it had joined the sanctions last year, when the ruble took a sharp plummet.

Analysts Markó Partners took a particular focus on mackerel, which has been a major export product to Russia. The price of mackerel in 2014 was about 7% lower than it is now, but the volume for the first seven months of this year and 2014 are starkly different. Even before Russia put Iceland on its ban list, it accepted about half the volume of mackerel in the first seven months of 2015 than it did last year; 40,000 tonnes from January through July 2014 compared to 20,000 tonnes this year.

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