Downtown Reykjavik is buzzing with life despite the arrival of winter. In the old city centre, tourists in thermal jackets snap photos at every corner and tour buses make their way towards the otherworldly natural sites that attract millions of sightseers each year to this sparsely populated volcanic island.

After a dip during the pandemic, Iceland received an estimated 2.2 million visitors last year, and is expected to welcome up to 2.5 million in 2026. New hotels and restaurants dot the capital, knitwear and artisanal craftsmakers are doing brisk business, and the streets are noticeably busier than they were a decade ago.

Bloomberg Citylab