AGP Executive Report

Geothermal Investment: Veitur is preparing five new wells in Reykjavík’s Laugardalur district to meet rising demand for hot water, with drilling due to run through May 2027. Icelandic Media: Telecoms company Syn and Sagafilm are launching Heima, a streaming service bringing more than 600 hours of Icelandic productions together. Inflation and Rates: Iceland’s central bank has held its key rate at 8% as inflation persists; the IMF forecasts inflation of 5.6% this year, among the highest in advanced economies. Air Links: Icelandair is adding nonstop St. Louis flights and restoring Madrid service for summer 2027, expanding connections for visitors and businesses. Trade: EFTA, which includes Iceland, is moving toward signing a free-trade agreement with Vietnam, covering goods, services and investment.

Trade: Iceland is set to join its EFTA partners in signing a free-trade agreement with Vietnam, covering goods, services and investment. Vietnam has offered to remove tariffs on more than 86% of tariff lines, though the deal is not yet in force. Inflation: The IMF projects Iceland’s 2026 inflation at 5.6%, the highest among advanced economies, keeping pressure on households and monetary policy. Aviation: Icelandair is preparing to launch nonstop St. Louis flights and restore Madrid service in summer 2027, expanding its US and European networks. Rates and wages: The Central Bank has held its key rate at 8% as inflation persists, while Iceland’s wage agreements have held after a last-minute deal.

Fish Farming: Iceland’s appeals board again overturned HMS decisions denying Seyðisfjörður coastal landowners a voice in proceedings over Kaldvík’s proposed offshore fish farm. Air Links: Icelandair will launch nonstop St. Louis flights in May 2027, with up to four weekly services connecting the US Midwest to more than 35 European destinations via Iceland. Business Funding: Icelandic firms can apply to the EU’s planned €115 million AGILE defence innovation programme, which will fund eligible projects by SMEs, including those from EFTA states. Monetary Policy: Iceland kept its key interest rate at 8% as inflation persisted; wage agreements also held after a last-minute deal.

Icelandair Expansion: Icelandair will launch up to four weekly flights between St. Louis and Reykjavík in May 2027, adding access to more than 35 European destinations; it also plans to restore Madrid service next summer. Monetary Policy: The Central Bank kept its key rate at 8% as inflation persists, while a last-minute deal kept wage agreements in place. Alvotech Partnership: The Icelandic biosimilar maker and South Korea’s LOTTE Biologics agreed to expand US-based manufacturing, aiming to strengthen global supply. Tech Exports: Reykjavík-based Flow signed a US distribution deal for its digital wellbeing platform, targeting veterans’ health services. Screen Exports: Icelandic producer Sagafilm’s Nordic crime drama Hildur has secured sales across Europe and Australia, extending the reach of Iceland’s screen industry.

Arctic Economy: Reykjavík’s Arctic Circle Assembly exposed divisions between the U.S. and its European and Canadian allies over security, resources and climate. Discussions also weighed the promise of Arctic shipping for Iceland’s ports and maritime services against infrastructure and environmental risks. Canada and Iceland are deepening trade and security ties. Air Links: Icelandair plans to launch St. Louis service and restore Madrid flights in 2027, building on a record September load factor. Innovation: Icelandic wellbeing company Flow signed a U.S. distribution deal targeting veterans, while Dynelectro’s 250-kW electrolyser completed 1,000 hours of operation. Rates and Labour: Iceland kept its key interest rate at 8% as inflation persists; wage agreements held after a last-minute deal.

U.S. Expansion: Icelandic wellbeing technology company Flow has signed a distribution deal with USVetServe, opening a route into the U.S. veterans’ health market for its digital meditation and virtual-reality services. Air Links: Icelandair will launch seasonal flights to St. Louis and restore Madrid service in 2027, while expanding connections with Southwest Airlines. Monetary Policy: Iceland’s central bank held its key rate at 8% as inflation persists, keeping borrowing costs high. Arctic Trade: Assembly discussions highlighted potential gains for Iceland’s ports and maritime services from Arctic shipping, alongside major infrastructure and environmental risks.

Icelandic Innovation: Reykjavík-based Flow has signed a U.S. distribution deal with USVetServe, bringing its Icelandic nature- and meditation-based wellbeing technology to American veterans. Air Links: Icelandair will launch St. Louis flights and restore Madrid service in summer 2027, while expanding connections with Southwest. Wages and Inflation: Wage agreements held after a last-minute deal, while the Central Bank kept its key rate at 8% as inflation persists. Biopharma: Alvotech and South Korea’s LOTTE Biologics agreed to expand U.S.-based manufacturing, aiming to increase global biosimilar supply. Arctic Trade: Assembly discussions in Reykjavík weighed the shorter shipping routes against ice, limited infrastructure and environmental risks; greater traffic could create opportunities for Icelandic ports and maritime services.

Air Connectivity: Icelandair will launch nonstop St. Louis flights and restore Madrid service in summer 2027, expanding its Southwest Airlines partnership to improve North American connections. Labour and Inflation: Unions and employers reached a last-minute deal to keep wage agreements in force through 2027. The package caps many state fee increases at 2.5% next year, while a new inflation review could trigger changes to the agreements. Monetary Policy: The Central Bank held its key rate at 8% as inflation persists, keeping price pressures a central concern for businesses and households. Trade and Energy: Iceland and Canada plan to update their bilateral free-trade agreement and deepen cooperation on geothermal energy, alongside closer Arctic security ties.

Aviation: Icelandair will add St. Louis and restore Madrid flights in summer 2027, while expanding Southwest connections across North America. Labour and Inflation: A last-minute deal keeps wage agreements in force through 2027, aiming to preserve industrial peace without adding to inflation; Iceland’s central bank has also held its key rate at 8% as inflation persists. Trade and Energy: Iceland and Canada plan to update their free-trade agreement and deepen Arctic security and geothermal cooperation. Life Sciences: Alvotech and South Korea’s LOTTE Biologics have agreed to expand U.S. biosimilar manufacturing, a move aimed at increasing global supply.

Wage Deal: Iceland’s unions, employers and government reached a last-minute settlement, keeping collective agreements in force and aiming to preserve labour peace through 2027. The package caps state fee increases at 2.5% next year, with officials warning measures must not reignite inflation. Monetary Policy: The Central Bank held its key rate at 8% as inflation remained 5.9%, despite a cooling economy and labour market. Canada Trade Ties: Iceland and Canada agreed to explore modernising the EFTA-Canada free-trade agreement and deepen cooperation on geothermal energy, alongside stronger Arctic security links. Air Connectivity: Icelandair plans up to four weekly flights between Reykjavík and St. Louis from May 2027, opening a new US gateway and connections to more than 35 European destinations.

Monetary Policy: The Central Bank held its key rate at 8% as inflation reached 5.9%, despite cooling economic activity. Governor Ásgeir Jónsson said rate cuts would normally be considered in a slowdown, but depend on inflation falling. Labour Relations: VR’s board voted to end its wage agreements, which expire on October 31 if formal notice is given. The move is not a strike announcement, and talks could still avert it; other major unions have extended agreements through 2027. Aviation: Icelandair will launch four weekly seasonal flights between Reykjavík and St. Louis from May 2027, adding a US gateway with connections to more than 35 European destinations. Biopharma: Alvotech has agreed to expand US biosimilar production with LOTTE Biologics at its Syracuse facility, adding manufacturing capacity for global supply. Fisheries: Fishmeal and fish-oil output in countries tracked by IFFO was down 45% and 26%, respectively, year to date; Iceland and the North Atlantic also reported lower raw-material availability.

Arctic Investment: The Arctic Circle Assembly opened in Reykjavík with a business forum focused on investment in infrastructure, shipping, tourism, energy and construction across Iceland and neighboring Arctic markets. Aviation: Icelandair will add seasonal St. Louis–Keflavík flights in May 2027, four times a week, linking passengers with Southwest’s network. The airline also reported a record September load factor despite carrying fewer passengers. Clean Energy: Icelandic firm Dynelectro’s 250-kW electrolyser completed 1,000 hours of operation, marking progress for its hydrogen technology. Monetary Policy: The Central Bank held its key interest rate.

Icelandair Expansion: Icelandair will launch four weekly flights between Keflavík and St. Louis in May 2027, adding a 16th US gateway and new connections through partner Southwest. Monetary Policy: The Central Bank of Iceland held its key rate, keeping borrowing costs unchanged as businesses and households watch for the next move. Airline Performance: Icelandair posted its highest September load factor on record despite carrying fewer passengers, pointing to fuller flights amid softer traffic. Trade and Investment: Iceland and its EFTA partners marked a year of the trade agreement with India, as officials highlighted scope to deepen investment and business ties. Corporate News: Syn’s parent company Asar now holds 5% of shares following a buyback.

US-Iceland Trade: Secretary of State Marco Rubio said Washington is pursuing a reciprocal trade arrangement with Iceland, with talks already being organized, while ruling out a broader return to free-trade agreements for now. Clean Energy Investment: Dutch climate-tech firm Skytree secured a €1 million development loan for a planned Iceland project using geothermal power to capture carbon directly from the air; the facility is targeted for 2028. Alvotech Expansion: The Reykjavík-based biosimilar maker partnered with LOTTE Biologics to manufacture multiple products at its New York facility, adding US capacity and strengthening global supply. Aviation: Air Atlanta says it remains on track to meet its targets despite market disruption, with its fleet deployed under long-term customer contracts. Icelandair, meanwhile, posted its highest September load factor despite fewer passengers. Geothermal Exports: Iceland Drilling is working with Nevis officials on preparations for geothermal drilling, a project the island’s premier says could transform its economy.

US–Iceland Security Talks: US Secretary of State Marco Rubio wrapped up a visit to Reykjavík, stressing Washington has “no plans” for Iceland without consent while offering to expand security cooperation as Arctic threats and risks to undersea cables and shipping lanes grow. Icelandair Performance: Icelandair reported a September record load factor of 84.9% despite a 3% year-on-year passenger decline, with capacity down 8% and yields up 14%. Biotech Deal: Alvotech and LOTTE Biologics announced a US manufacturing partnership to boost global supply, with LOTTE’s Syracuse facility set to produce drug substance for multiple antibody biosimilar products. Climate Tech Funding: Amsterdam climate company Skytree secured €1m from Invest International to develop a CO2 direct-air-capture project in Iceland using geothermal energy, targeting an installation by 2028. Fishing Pressure in the North Atlantic: Retailers and major seafood firms urged mackerel nations including Iceland to tighten management after new science suggests higher sustainable yields but warns stocks remain precarious. Travel & Tourism Signals: A report highlighted Iceland among destinations still open for winter getaways, while broader European tourism rankings put Reykjavík below top cities like Edinburgh and Lisbon.

Arctic Security & Diplomacy: US Secretary of State Marco Rubio landed in Reykjavík for a three-nation NATO tour, stressing deeper US-Iceland defence cooperation and “economic and security collaboration” as Arctic tensions with Russia rise; Iceland officials also used the visit to reassure partners amid earlier US Greenland-related friction. Geopolitics Watch: Rubio also said the US is closely monitoring a suspected plague incident in Siberia, while Russia reported no plague in samples and no confirmed pathogenic emergency. Trade & Investment: India and Switzerland signed multiple pacts in New Delhi, including migration and mobility arrangements plus expanded cooperation on infrastructure, technology, innovation, supply chains, nuclear energy and defence, alongside a major investment roadmap. Markets & Mining: Amaroq reported strong Nalunaq gold output (about 12 koz in Q3) and said it will enter the FTSE 250 index on 8 October, after delivering its Q4 target early. Aviation Loyalty: SAS EuroBonus expanded its status match offer to elite tiers across many non-SkyTeam airlines, with matches available for fees. Film & Culture: RIFF crowned Marine Atlan’s “La Gradiva” with the Golden Puffin, while Tallinn’s TV Beats selected 10 drama projects for its co-financing market.