Iceland getting its mojo back?

Following possibly the largest financial sector crisis adjusted for the size of the country, the people in Iceland have been in a pretty subdued mood as of late. Facing a prospect of a generation of financial distress contributed to sullen mood. But the economy was allowed to truly bottom out and the currency weakened dramatically. Within 2-3 years the seeds for stabilization and further growth had been created.

Now there are clear signs that the optimism is returning. The rise in unemployment and prolonged recession appeared to have been halted from 2010 onwards. OMX Iceland All-Share (ICEXI) has performed relatively well this year, although comparisons are difficult given that country’s all three commercial banks collapsed in 2008 and they comprised the majority of the index prior to that.

The cheaper domestic currency has made the country more attractive for tourists. In Lonely Planet’s ’Best in Travel 2012’ Iceland and the capital Reykjavik took the top spots. The fishing industry is also no longer willing to yield to European and Norwegian quota demands, as has been shown in the so called ’mackerel war’. Iceland also just did a deal with Russia for the export of dairy products.

Iceland’s government also denied Chinese billionaire investor Huang Nubo's bid to purchase a 300 square kilometre piece of land in the north of the country through his investment company Beijing Zhongkun Investment Group Co. According to Chinese media reports, Nubo was planning to invest some 200 million US Dollars to build a resort with hotels and other activities. Nubo had been in talks with a group of farmers to buy the land for under 10 million. This could have been the largest FDI investment to Iceland from China.