Wow Air Collapse Decimates Iceland’s Economy

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It’s not often that an entire economy is thrown off course by a single corporate event. But that’s what appears to have happened in Iceland. The recent bankruptcy of budget airline Wow Air has delivered such a blow to the Icelandic tourist industry, and the wider economy, that the central bank on Wednesday cut its main interest rate by half a point to 4%, Bloomberg News reported. It also said that the economy is now set to contract 0.4%, compared with a previous estimate for growth of 1.8%. The announcement makes clear how badly Wow Air’s failure has hurt Iceland, which has also suffered from a disastrous fishing season. The airline had helped turn tourism into Iceland’s biggest cash cow, fueling a boom that dragged the nation out of its financial collapse more than a decade ago. Its demise in March spelled an abrupt end to that boom. Read more