What Is Iceland Tourism Percentage of GDP & Why Is It Important?

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1. What Role Does Tourism Play in Iceland’s GDP?

Tourism’s contribution to Iceland’s Gross Domestic Product (GDP) reached 8.8% in 2023, marking its highest level to date. This indicates the significant economic impact of tourism on the Icelandic economy. The tourism sector’s robust performance emphasizes its critical role in Iceland’s financial landscape, outpacing previous years and solidifying its position as a key driver of economic growth.

Iceland’s tourism sector has seen significant growth, particularly in recent years. Here’s a more detailed breakdown:

• Increase Over Time: The 8.8% figure for 2023 is a notable increase compared to 7.5% in 2022. It also surpasses the pre-pandemic average of around 8.2% from 2016 to 2019, showing a strong recovery and growth in the tourism sector post-COVID-19.
• Economic Impact: Tourism directly impacts various sectors, including accommodation, transportation, food services, and recreational activities. Increased tourism spending boosts revenues for these businesses, leading to job creation and overall economic stimulation.
• GDP Contribution: The contribution of tourism to GDP is a key indicator of its economic importance. In Iceland, the rise to 8.8% signifies that tourism is a substantial component of the national economy, influencing economic policies and development strategies.

The rise in tourism’s contribution to Iceland’s GDP has several broader implications:

• Investment and Infrastructure: A strong tourism sector encourages investment in infrastructure, such as airports, roads, and tourist facilities. These improvements not only benefit tourists but also enhance the quality of life for residents.
• Employment Opportunities: Tourism generates employment across various skill levels, from hospitality and tour guiding to transportation and retail. The increase in tourism supports job growth and reduces unemployment rates.
• Cultural Exchange: Tourism fosters cultural exchange and understanding between Iceland and the rest of the world. This can lead to a more diverse and vibrant society, with increased awareness and appreciation of different cultures.

The impact of tourism on Iceland’s GDP can be further contextualized by comparing it to other sectors and countries:

• Comparison with Other Industries: Analyzing the GDP contribution of other major industries in Iceland (e.g., fishing, energy) provides a balanced view of the economy. This comparison helps to understand the relative importance of tourism and identify opportunities for diversification.
• International Benchmarks: Comparing Iceland’s tourism GDP contribution with that of other countries that heavily rely on tourism (e.g., Maldives, Greece) can provide insights into best practices and potential challenges. This benchmarking exercise helps Iceland to refine its tourism strategy and remain competitive.
• Sustainability Considerations: As tourism grows, it’s essential to consider its environmental and social impacts. Sustainable tourism practices can help to preserve Iceland’s natural beauty and cultural heritage while ensuring the long-term viability of the tourism sector.

2. What Percentage of Employment in Iceland is Related to Tourism?

Approximately 9.7% of total working hours in Iceland were directly linked to tourism in 2023. This shows that tourism is a significant source of employment and income for many residents. This includes jobs in hotels, restaurants, tour companies, and other businesses that serve tourists. Additionally, about 22,500 individuals were employed in the tourism sector in Iceland in 2023, marking an 8% increase from the previous year.

To fully understand the impact of tourism on employment in Iceland, consider these aspects:

• Direct vs. Indirect Employment: Direct employment includes jobs directly related to serving tourists, such as hotel staff, tour guides, and restaurant workers. Indirect employment includes jobs in industries that support tourism, such as agriculture, transportation, and manufacturing.
• Seasonal Variations: Tourism in Iceland is highly seasonal, with peak seasons during the summer and winter months. This can lead to fluctuations in employment levels, with more jobs available during peak seasons and fewer during off-seasons.
• Job Quality: The quality of jobs in the tourism sector can vary, with some positions offering higher wages and benefits than others. Efforts to improve job quality, such as providing training and career development opportunities, can help to attract and retain workers in the tourism industry.

To delve deeper into tourism-related employment in Iceland, it’s helpful to compare it with other industries and countries:

• Comparison with Other Industries: Examining employment levels in other major industries in Iceland (e.g., fishing, energy) provides a comprehensive view of the labor market. This comparison helps to understand the relative importance of tourism and identify opportunities for diversification.
• International Benchmarks: Comparing Iceland’s tourism employment with that of other countries that heavily rely on tourism can provide insights into best practices and potential challenges. This benchmarking exercise helps Iceland to refine its tourism strategy and remain competitive.
• Economic Resilience: A diversified tourism sector can help to mitigate the impacts of economic shocks, such as recessions or natural disasters. By offering a range of tourism products and services, Iceland can attract a wider range of visitors and reduce its reliance on any single market or segment.

To ensure sustainable and equitable tourism development, it’s essential to address challenges such as:

• Infrastructure Limitations: Iceland’s infrastructure, including roads, airports, and accommodation facilities, may struggle to keep pace with the rapid growth in tourism. Investing in infrastructure improvements can help to alleviate congestion and improve the visitor experience.
• Environmental Impacts: Tourism can have significant environmental impacts, such as pollution, habitat destruction, and resource depletion. Implementing sustainable tourism practices, such as reducing waste, conserving water, and protecting natural areas, can help to minimize these impacts.
• Social and Cultural Impacts: Tourism can also have social and cultural impacts, such as overcrowding, cultural commodification, and displacement of local residents. Engaging with local communities and respecting cultural traditions can help to mitigate these impacts and ensure that tourism benefits everyone.

3. How Much Did Internal Tourism Consumption Amount to in Iceland?

In 2023, total internal tourism consumption in Iceland, including both inbound and domestic tourism, reached approximately 845 billion ISK, marking a record high. This figure represents the total spending by tourists within Iceland. In comparison, total internal tourism consumption in 2022 was estimated at 676 billion ISK. It’s important to note that these figures are at current prices and are influenced by inflation.

Here’s a detailed look at various aspects of internal tourism consumption in Iceland:

• Components of Internal Tourism: Internal tourism includes both inbound tourism (spending by foreign tourists in Iceland) and domestic tourism (spending by Icelandic residents traveling within Iceland). Understanding the relative contributions of these components provides insights into the overall dynamics of the tourism sector.
• Impact of Inflation: The figures for tourism consumption are quoted at current prices, meaning they are influenced by inflation. Adjusting these figures for inflation provides a more accurate picture of real growth in tourism spending.
• Seasonal Variations: Tourism consumption in Iceland is highly seasonal, with peak seasons during the summer and winter months. This can lead to fluctuations in spending levels, with higher consumption during peak seasons and lower consumption during off-seasons.

To better understand internal tourism consumption in Iceland, it’s helpful to compare it with previous years and other countries:

• Historical Trends: Analyzing historical trends in tourism consumption provides insights into the long-term growth and development of the tourism sector. This analysis helps to identify periods of rapid growth, stagnation, or decline and understand the factors driving these trends.
• International Benchmarks: Comparing Iceland’s tourism consumption with that of other countries that heavily rely on tourism can provide insights into best practices and potential challenges. This benchmarking exercise helps Iceland to refine its tourism strategy and remain competitive.
• Economic Diversification: A diversified tourism sector can help to mitigate the impacts of economic shocks, such as recessions or natural disasters. By offering a range of tourism products and services, Iceland can attract a wider range of visitors and reduce its reliance on any single market or segment.

To ensure sustainable and equitable tourism development, it’s essential to address challenges such as:

• Infrastructure Limitations: Iceland’s infrastructure, including roads, airports, and accommodation facilities, may struggle to keep pace with the rapid growth in tourism. Investing in infrastructure improvements can help to alleviate congestion and improve the visitor experience.
• Environmental Impacts: Tourism can have significant environmental impacts, such as pollution, habitat destruction, and resource depletion. Implementing sustainable tourism practices, such as reducing waste, conserving water, and protecting natural areas, can help to minimize these impacts.
• Social and Cultural Impacts: Tourism can also have social and cultural impacts, such as overcrowding, cultural commodification, and displacement of local residents. Engaging with local communities and respecting cultural traditions can help to mitigate these impacts and ensure that tourism benefits everyone.

4. What Was the Expenditure on Inbound Tourism in Iceland?

Expenditure on inbound tourism in Iceland amounted to 503 billion ISK in 2023, compared to 399 billion ISK in 2022. This shows a significant increase in spending by foreign tourists visiting Iceland. The largest share of this expenditure, 24.2%, was allocated to accommodation.

Understanding inbound tourism expenditure is essential for assessing the economic impact of foreign visitors on Iceland. Here’s a detailed breakdown:

• Key Components of Inbound Tourism: The primary components of inbound tourism include accommodation, food and beverage services, transportation, recreational activities, and retail shopping. Analyzing the spending patterns across these components provides insights into the preferences and behaviors of foreign tourists.
• Impact of Currency Exchange Rates: Fluctuations in currency exchange rates can significantly impact inbound tourism expenditure. A weaker Icelandic króna (ISK) can make Iceland more affordable for foreign tourists, leading to increased spending.
• Seasonal Variations: Inbound tourism in Iceland is highly seasonal, with peak seasons during the summer and winter months. This can lead to fluctuations in spending levels, with higher expenditure during peak seasons and lower expenditure during off-seasons.

To gain a deeper understanding of inbound tourism expenditure in Iceland, consider these comparative and contextual analyses:

• Historical Trends: Analyzing historical trends in inbound tourism expenditure provides insights into the long-term growth and development of the tourism sector. This analysis helps to identify periods of rapid growth, stagnation, or decline and understand the factors driving these trends.
• International Benchmarks: Comparing Iceland’s inbound tourism expenditure with that of other countries that heavily rely on tourism can provide insights into best practices and potential challenges. This benchmarking exercise helps Iceland to refine its tourism strategy and remain competitive.
• Economic Diversification: A diversified tourism sector can help to mitigate the impacts of economic shocks, such as recessions or natural disasters. By offering a range of tourism products and services, Iceland can attract a wider range of visitors and reduce its reliance on any single market or segment.

To ensure sustainable and equitable tourism development, it’s essential to address challenges such as:

• Infrastructure Limitations: Iceland’s infrastructure, including roads, airports, and accommodation facilities, may struggle to keep pace with the rapid growth in tourism. Investing in infrastructure improvements can help to alleviate congestion and improve the visitor experience.
• Environmental Impacts: Tourism can have significant environmental impacts, such as pollution, habitat destruction, and resource depletion. Implementing sustainable tourism practices, such as reducing waste, conserving water, and protecting natural areas, can help to minimize these impacts.
• Social and Cultural Impacts: Tourism can also have social and cultural impacts, such as overcrowding, cultural commodification, and displacement of local residents. Engaging with local communities and respecting cultural traditions can help to mitigate these impacts and ensure that tourism benefits everyone.

5. What Share of Total Internal Tourism Consumption is Attributed to Domestic Tourism Expenditure?

In 2023, domestic tourism expenditure accounted for 38.2% of total internal tourism consumption in Iceland. This indicates the portion of tourism spending that comes from Icelandic residents traveling within their own country.

Understanding domestic tourism expenditure is crucial for assessing the overall health and resilience of Iceland’s tourism sector. Here’s a detailed examination:

• Key Components of Domestic Tourism: The major components of domestic tourism include accommodation, food and beverage services, transportation, recreational activities, and retail shopping. Analyzing the spending patterns across these components provides insights into the preferences and behaviors of Icelandic travelers.
• Impact of Economic Conditions: Domestic tourism expenditure is highly sensitive to economic conditions. During periods of economic growth, Icelandic residents are more likely to travel within their own country, leading to increased spending. Conversely, during periods of economic downturn, domestic tourism expenditure may decline.
• Seasonal Variations: Domestic tourism in Iceland is influenced by seasonal factors. During the summer months, Icelandic residents are more likely to take vacations and explore different regions of the country. During the winter months, domestic tourism may be driven by activities such as skiing and snowboarding.

To better understand domestic tourism expenditure in Iceland, it’s helpful to conduct comparative and contextual analyses:

• Historical Trends: Analyzing historical trends in domestic tourism expenditure provides insights into the long-term growth and development of the tourism sector. This analysis helps to identify periods of rapid growth, stagnation, or decline and understand the factors driving these trends.
• International Benchmarks: Comparing Iceland’s domestic tourism expenditure with that of other countries can provide insights into best practices and potential challenges. This benchmarking exercise helps Iceland to refine its tourism strategy and remain competitive.
• Economic Diversification: A diversified tourism sector can help to mitigate the impacts of economic shocks, such as recessions or natural disasters. By offering a range of tourism products and services, Iceland can attract a wider range of visitors and reduce its reliance on any single market or segment.

To ensure sustainable and equitable tourism development, it’s essential to address challenges such as:

• Infrastructure Limitations: Iceland’s infrastructure, including roads, airports, and accommodation facilities, may struggle to keep pace with the rapid growth in tourism. Investing in infrastructure improvements can help to alleviate congestion and improve the visitor experience.
• Environmental Impacts: Tourism can have significant environmental impacts, such as pollution, habitat destruction, and resource depletion. Implementing sustainable tourism practices, such as reducing waste, conserving water, and protecting natural areas, can help to minimize these impacts.
• Social and Cultural Impacts: Tourism can also have social and cultural impacts, such as overcrowding, cultural commodification, and displacement of local residents. Engaging with local communities and respecting cultural traditions can help to mitigate these impacts and ensure that tourism benefits everyone.

6. What are Tourism Satellite Accounts (TSAs)?

Tourism Satellite Accounts (TSAs) are a standardized framework used to measure the economic impact of tourism within a country’s national accounting system. TSAs provide detailed information on tourism’s contribution to GDP, employment, and other economic indicators. They are used to assess the role of tourism in the economy, monitor its performance, and inform policy decisions.

Understanding TSAs is essential for anyone interested in the economics of tourism. Here’s a detailed breakdown:

• Purpose of TSAs: The primary purpose of TSAs is to provide a comprehensive and consistent measure of tourism’s economic impact. This information is used to inform policy decisions, monitor industry performance, and promote sustainable tourism development.
• Key Components of TSAs: The major components of TSAs include tourism expenditure, tourism value added, tourism employment, and tourism investment. Analyzing these components provides insights into the different ways in which tourism contributes to the economy.
• International Standards: TSAs are based on international standards developed by the United Nations World Tourism Organization (UNWTO). This ensures that TSAs are comparable across countries, allowing for international benchmarking and analysis.

To better understand TSAs, it’s helpful to consider their applications and benefits:

• Policy Development: TSAs provide policymakers with the information they need to make informed decisions about tourism development. This includes decisions about infrastructure investment, marketing and promotion, and regulatory policies.
• Industry Monitoring: TSAs allow industry stakeholders to monitor the performance of the tourism sector and identify opportunities for growth and improvement. This information can be used to develop targeted marketing campaigns, improve customer service, and enhance the overall visitor experience.
• Economic Impact Assessment: TSAs can be used to assess the economic impact of specific tourism projects or events. This information can be used to justify investments in tourism infrastructure, attract funding, and promote the benefits of tourism to local communities.

To ensure the accuracy and reliability of TSAs, it’s essential to address challenges such as:

• Data Collection: The compilation of TSAs requires extensive data collection from a variety of sources. Ensuring the accuracy and completeness of this data can be challenging, particularly in countries with limited statistical capacity.
• Methodological Issues: The methodology underlying the compilation of TSAs is complex and requires specialized expertise. Ensuring that TSAs are compiled in accordance with international standards requires ongoing training and technical assistance.
• Resource Constraints: The compilation of TSAs can be resource-intensive, requiring significant financial and human resources. Securing adequate resources for TSA compilation is essential for ensuring the sustainability of the system.

7. How Have Tourism Satellite Account Results Been Revised?

The results of Tourism Satellite Accounts (TSAs) for previous years are often revised in parallel with the publication of new data. These revisions are necessary because TSAs are based on both expenditure and production approaches to compiling GDP. Changes to GDP results also affect the TSAs. Additionally, methodologies for compiling certain data, such as domestic tourism expenditure, may be updated, leading to revisions.

Understanding the revisions in TSAs is essential for accurately interpreting tourism data. Here’s a detailed explanation:

• Reasons for Revisions: Revisions to TSA results are typically made for several reasons, including updates to source data, improvements in methodology, and changes in international standards. These revisions ensure that TSAs provide the most accurate and up-to-date picture of tourism’s economic impact.
• Impact of GDP Revisions: Because TSAs are based on GDP data, any revisions to GDP will also affect the TSAs. This is particularly true for components such as tourism value added, which is directly linked to GDP.
• Methodological Changes: Methodological changes, such as updates to the way domestic tourism expenditure is estimated, can also lead to revisions in TSA results. These changes are typically made to improve the accuracy and reliability of the data.

To better understand the revisions in TSAs, it’s helpful to consider their implications and benefits:

• Improved Accuracy: Revisions to TSA results can improve the accuracy of tourism data, providing policymakers and industry stakeholders with a more reliable basis for decision-making.
• Enhanced Comparability: Revisions can also enhance the comparability of TSAs across countries and over time. This allows for more meaningful international benchmarking and trend analysis.
• Better Policy Outcomes: By providing policymakers with more accurate and reliable information, revisions to TSAs can lead to better policy outcomes and more effective tourism development strategies.

To ensure the transparency and credibility of TSA revisions, it’s essential to:

• Document Revisions: Document all revisions to TSA results, including the reasons for the revisions and the impact on key indicators. This allows users to understand the changes that have been made and assess their significance.
• Communicate Revisions: Communicate revisions to TSA results to users in a timely and transparent manner. This helps to build trust in the data and ensures that users are aware of any changes that may affect their analysis.
• Seek Feedback: Seek feedback from users on the revisions to TSA results. This helps to identify any issues or concerns and ensures that the revisions are meeting the needs of users.

8. What is the Methodology for Compiling Domestic Tourism Expenditure?

The methodology for compiling domestic tourism expenditure involves gathering data on the spending patterns of residents traveling within their own country. This data is typically collected through surveys, administrative records, and other sources. The methodology may vary depending on the availability of data and the specific characteristics of the tourism sector in each country.

Understanding the methodology for compiling domestic tourism expenditure is crucial for interpreting tourism statistics accurately. Here’s a detailed explanation:

• Data Sources: The primary data sources for compiling domestic tourism expenditure include household surveys, visitor surveys, tourism business surveys, and administrative records. Each of these sources provides different types of information about tourism spending patterns.
• Estimation Techniques: Various estimation techniques are used to compile domestic tourism expenditure, including direct estimation, imputation, and modeling. The choice of technique depends on the availability of data and the specific characteristics of the tourism sector.
• Challenges in Compilation: Compiling domestic tourism expenditure can be challenging due to the difficulty of tracking the spending patterns of residents traveling within their own country. This requires careful coordination and collaboration between different statistical agencies and data providers.

To better understand the methodology for compiling domestic tourism expenditure, it’s helpful to consider the following:

• Survey Design: The design of household and visitor surveys is critical for accurately capturing domestic tourism expenditure. This includes careful attention to sampling methods, questionnaire design, and data collection procedures.
• Data Integration: Integrating data from different sources can be challenging due to differences in definitions, classifications, and measurement methods. This requires careful data harmonization and standardization.
• Validation Techniques: Validation techniques are used to assess the accuracy and reliability of domestic tourism expenditure estimates. This includes comparing the estimates with other data sources and conducting sensitivity analysis.

To improve the methodology for compiling domestic tourism expenditure, it’s essential to:

• Enhance Data Collection: Enhance data collection efforts by expanding the scope and coverage of household and visitor surveys. This can provide more detailed information about domestic tourism spending patterns.
• Improve Estimation Techniques: Improve estimation techniques by developing more sophisticated models and incorporating new data sources. This can lead to more accurate and reliable estimates of domestic tourism expenditure.
• Strengthen Collaboration: Strengthen collaboration between statistical agencies and data providers to improve data sharing and coordination. This can help to reduce data gaps and inconsistencies.

9. What are the Contact Details for Further Information on Iceland Tourism Statistics?

For further information on Iceland tourism statistics, you can contact Statistics Iceland directly. You can call them at 528 1100 or email [email protected]. They will be able to provide more detailed information and answer any specific questions you may have.

To effectively use these contact details and gather the information you need, consider these tips:

• Prepare Your Questions: Before contacting Statistics Iceland, take some time to prepare a list of specific questions you have about Iceland tourism statistics. This will help you to make the most of your conversation and ensure that you get the information you need.
• Be Clear and Concise: When you contact Statistics Iceland, be clear and concise in your communication. Clearly state your name, affiliation, and the purpose of your inquiry. This will help the staff to understand your needs and provide you with the appropriate assistance.
• Follow Up: If you don’t receive a response to your email or phone call within a reasonable time frame, follow up with Statistics Iceland to ensure that your inquiry is being addressed. This can help to expedite the process and ensure that you get the information you need in a timely manner.

To ensure that you get the most out of your interaction with Statistics Iceland, it’s helpful to:

• Do Your Research: Before contacting Statistics Iceland, do some research on your own to see if you can find the information you need online or in other published sources. This can help you to narrow down your questions and make your inquiry more focused.
• Be Patient: The staff at Statistics Iceland are often busy and may not be able to respond to your inquiry immediately. Be patient and understanding, and allow them some time to gather the information you need.
• Be Respectful: Treat the staff at Statistics Iceland with respect and courtesy. Remember that they are there to help you, and they will be more likely to assist you if you are polite and professional.

By following these tips, you can effectively use the contact details provided to gather the information you need about Iceland tourism statistics.

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Frequently Asked Questions (FAQs)

1. What factors contribute to Iceland’s tourism percentage of GDP reaching a record high in 2023?
   The increase in Iceland’s tourism percentage of GDP to a record high of 8.8% in 2023 is attributed to factors such as the recovery from the Covid-19 pandemic, increased inbound tourism expenditure, and growth in domestic tourism consumption. According to preliminary results, these factors collectively boosted the tourism sector’s contribution to the national economy.
2. How does Iceland’s tourism employment rate compare to pre-pandemic levels, and what measures are in place to support this growth?
   In 2023, Iceland saw approximately 9.7% of total working hours directly related to tourism, with around 22,500 persons employed in the sector, marking an 8% increase from the previous year. This indicates a strong recovery towards pre-pandemic levels. Support measures may include government initiatives promoting tourism, investments in infrastructure, and training programs for tourism-related jobs.
3. Why is it important to consider inflation when analyzing internal tourism consumption in Iceland, and how does it affect the real growth?
   It is essential to consider inflation when analyzing internal tourism consumption in Iceland because the figures are quoted at current prices, which are influenced by inflation. Adjusting these figures for inflation provides a more accurate picture of real growth in tourism spending, reflecting the actual increase in consumption rather than just price increases.
4. What specific components of inbound tourism expenditure contribute most to Iceland’s economy, and how are these areas being developed?
   Accommodation constitutes the largest share of inbound tourism expenditure in Iceland, accounting for 24.2% in 2023. Development in this area may include investments in new hotels and guesthouses, improvements in service quality, and marketing strategies to attract more tourists to Icelandic accommodations.
5. How does Iceland’s domestic tourism expenditure contribute to the overall tourism sector, and what initiatives are in place to encourage local travel?
   Domestic tourism expenditure accounted for 38.2% of total internal tourism consumption in Iceland in 2023, indicating its significant contribution to the overall tourism sector. Initiatives to encourage local travel may include promotional campaigns targeting residents, discounts on local attractions, and support for domestic tourism businesses.
6. What is the significance of Tourism Satellite Accounts (TSAs) in measuring Iceland’s tourism economy, and how are these accounts utilized for policy-making?
   Tourism Satellite Accounts (TSAs) are significant in measuring Iceland’s tourism economy as they provide a standardized framework to assess tourism’s economic impact within the national accounting system. These accounts are utilized for policy-making by informing decisions related to infrastructure investment, marketing strategies, and regulatory policies to support sustainable tourism development.
7. What are the implications of revising Tourism Satellite Account results, and how does it ensure the accuracy and reliability of tourism data?
   Revising Tourism Satellite Account results ensures the accuracy and reliability of tourism data by incorporating updated source data, methodological improvements, and changes in international standards. This process provides policymakers and industry stakeholders with a more reliable basis for decision-making, enhancing the credibility of tourism statistics.
8. What challenges are involved in compiling domestic tourism expenditure, and what measures are taken to address these challenges?
   Challenges in compiling domestic tourism expenditure include the difficulty of tracking the spending patterns of residents traveling within their own country and ensuring data accuracy. Measures taken to address these challenges involve enhancing data collection efforts, improving estimation techniques, and strengthening collaboration between statistical agencies and data providers.
9. Where can individuals find further information on Iceland tourism statistics, and what type of assistance is available from these sources?
   Individuals can find further information on Iceland tourism statistics by contacting Statistics Iceland directly. Assistance available from these sources may include providing more detailed data, answering specific questions, and offering guidance on interpreting tourism statistics for research or policy purposes.
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