Labor productivity remains low in Iceland’s non-traditional sectors. Iceland’s sectoral
productivity compares favorably vis-à-vis its Nordic peers in the “traditional” marine products and
energy-intensive exporting sectors, thanks to economies of scale afforded by external markets and
through competition, but lags behind in “non-traditional” industries, including tourism. Increasing
labor productivity in non-traditional sectors is important for growth and BOP prospects. A publicprivate
“growth forum” has been assessing various structural reforms, drawing from an influential 2012
McKinsey Consulting report. Proposals include: (i) increasing foreign participation (retail and finance);
(ii) simplifying the customs environment and trade barriers (food and consumer goods); (iii) attracting
higher value tourists and addressing seasonality; and (iv) infrastructure investment (tourism