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Economy of Iceland

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Economy ofIceland
Reykjavík
CurrencyIcelandic króna(ISK, kr)
Calendar year
Trade organisations
EFTA,EEA,OECD,WTO
Country group
Statistics
PopulationIncrease387,758 (1 January 2023)[3]
GDP
  • Increase$31 billion (nominal, 2023)[4]
  • Increase$28 billion (PPP,2023)[4]
GDP rank
GDP growth
  • 4.1% (2023)
  • 1.7% (2024)
  • 2.0% (2025)[4]
GDP per capita
  • $80,000 (nominal, 2023)[4]
  • $72,000 (PPP, 2023)[4]
GDP per capita rank
GDP by sector
9.8% (March 2023)[6]
Population belowpoverty line
  • 8% – income below 1,200€/ month (2015)[7]
  • 11.6% at risk of poverty or social exclusion (AROPE 2019)[8]
23.7low(2019)[9]
Labour force
  • Increase222,391 (2021)[11]
  • Decrease86.5% employment rate (2018)[12]
Labour force by occupation
Unemployment
  • Steady5.1% (February 2023)[13]
  • Positive decrease9.9% youth unemployment (15 to 24 year-olds; July 2020)[14]
Average gross salary
553,000 ISK /€4,000 month
388,000 ISK /€2,800 month
Main industries
tourism, fish processing; aluminum smelting; geothermal power, hydropower; medical/pharmaceutical products
External
ExportsIncrease$9.775 billion (2021 est)[5]
Export goods
fish and fish products (42%), aluminum (38%), agricultural products, medicinal and medical products, ferro-silicon (2015)
Main export partners
ImportsIncrease$10.234 billion (2021 est.)
Import goods
refined petroleum,aluminum oxide,carbon/graphite electronics,cars,packaged medicines(2019)
Main import partners
FDIstock
  • Decrease$6.666 billion (31 December 2017 est.)[5]
  • DecreaseAbroad: $11.24 billion (31 December 2017 est.)[5]
Decrease$857 million (2017 est.)[5]
Positive decrease$21.7 billion (31 December 2017 est.)[5]
Public finances
Positive decrease40% of GDP (2017 est.)[5]
+1.5% (of GDP) (2017 est.)[5]
Revenues10.39 billion (2017 est.)[5]
Expenses10.02 billion (2017 est.)[5]
Economic aidc. $40 million (0.24% GDP, 2015 budget)
Moody's Investors Service[15]
  • A-2 (Foreign)
  • A-2 (Domestic)
  • Outlook: Stable
Standard & Poor's[15]
  • A (Foreign)
  • A (Domestic)
  • Outlook: Stable
Fitch[15]
  • A (Foreign)
  • A (Domestic)
  • Outlook: Stable
Decrease$6.567 billion (31 December 2017 est.)[5]
All values, unless otherwise stated, are inUS dollars.

Theeconomy of Icelandis small and subject to high volatility. In 2011,gross domestic productwasUS$12 billion, but by 2018 it had increased to a nominal GDP ofUS$27 billion. With a population of387,000,this is $55,000per capita,based onpurchasing power parity(PPP) estimates.[16]The2008–2011 Icelandic financial crisisproduced a decline in GDP and employment that has since been reversed entirely by a recovery aided by atourismboom starting in 2010. Tourism accounted for more than 10% of Iceland's GDP in 2017.[17]After a period of robust growth, Iceland's economy is slowing down according to an economic outlook for the years 2018–2020 published by Arion Research in April 2018.[18]

Icelandhas amixed economywith high levels offree tradeand government intervention. However, government consumption is less than otherNordic countries.Hydro-poweris the primary source of home and industrial electrical supply in Iceland.[19]

In the 1990s Iceland undertook extensive free market reforms, which initially produced strong economic growth. As a result, Iceland was rated as having one of the world's highest levels ofeconomic freedom[20]as well as civil freedoms. In 2007, Iceland topped the list of nations ranked byHuman Development Index[21]and was one of the mostegalitarian,according to the calculation provided by theGini coefficient.[22]

From 2006 onwards, the economy faced problems of growinginflationandcurrent account deficits.Partly in response, and partly as a result of earlier reforms, the financial system expanded rapidly before collapsing entirely in a sweepingfinancial crisis.Iceland had to obtain emergency funding from theInternational Monetary Fundand a range of European countries in November 2008. The economy has since rebounded, beginning in 2010.

Iceland bonds had anInverted yield curvein 2008
10 year bonds
5 year bonds
2 year bonds

History[edit]

Main article:Economic history of Iceland

Geography and resources[edit]

Iceland occupies a land area of 103,000 square kilometers. It has a 4,790 kilometer coastline and a 200 nautical mile (370.4 km) exclusive economic zone extending over 758,000 square kilometers of water. Approximately only 0.7% of Iceland's surface area isarable,since the island's terrain is mostly mountainous and volcanic.[23]

Iceland has few provenmineralresources. In the past, deposits ofsulphurhave been mined, anddiatomite(skeletal algae) was extracted from LakeMývatnuntil recently. However, today most sulphur is obtained in the refining of oil. The diatomite plant has closed for environmental reasons. The only natural resource conversion in Iceland is the manufacture ofcement.Concreteis widely used as building material, including for all types of residential housing.

By harnessing the abundanthydroelectricandgeothermalpower sources,Iceland's renewable energy industryprovides close to 85% of all the nation'sprimary energy[24]– proportionally more than any other country[25]– with 99.9% of Iceland'selectricitybeing generated from renewables.

By far the largest of the manyIcelandic hydroelectric power stationsisKárahnjúkar Hydropower Plant(690 MW) in the area north ofVatnajökull.Other stations include Búrfell (270 MW), Hrauneyjarfoss (210 MW), Sigalda (150 MW), Blanda (150 MW), and more. Iceland has explored the feasibility of exporting hydroelectric energy via submarine cable to mainland Europe and also actively seeks to expand its power-intensive industries, includingaluminiumandferro-siliconsmelting plants.

Recent geological research has improved the likelihood of Iceland having sizable off-shoreoil reserveswithin its200 mile economic zonein theseabedof theJan Mayenarea.[26][27]

Sectors[edit]

In 2017 the proportion of Iceland's exports was: tourism 42%, seafood 17%, aluminium 16%, other 24%.[17]

Tourism[edit]

Main article:Tourism in Iceland

Tourism is Iceland's largest export sector by far. Tourism accounted for more than 33% of the country's GDP in 2019.[17]Iceland is one of the most tourism dependent countries on earth.[28]In October 2017 the tourism sector directly employed around 26,800 people, with the total number of employees in the country being 186,900.[29]

At the start of the growth period around 2010 tourism benefited from a weak ISK but a strong ISK is nowcoolingdown the sector. Since 2010 tourist arrivals in Iceland have increased by 378%.[18]

Manufacturing[edit]

Iceland is the world's largest electricity producer per capita.[24]The presence of abundant electrical power due to Iceland's geothermal and hydroelectric energy sources has led to the growth of the manufacturing sector. Power-intensive industries, which are the largest components of the manufacturing sector, produce mainly for export. Manufactured products constituted 36% of all merchandise exports, an increase from the 1997 figure of 22%. Power-intensive products' share of merchandise exports is 21%, compared to 12% in 1997.[30]

Aluminium[edit]

Aluminium smeltingis the most important power-intensive industry in Iceland. There are currently three plants in operation with a total capacity of over 850,000 metric tons per year (mtpy) in 2019,[31]putting Iceland at11th placeamong aluminium-producing nations worldwide.

Rio Tinto Alcanoperates Iceland's first aluminium smelter (plant name: ISAL), in Straumsvík, near the town ofHafnarfjörður.The plant has been in operation since 1969. Its initial capacity was 33,000 mtpy but it has since been expanded several times and now has a capacity of about 189,000 mtpy.

The second plant started production in 1998 and is operated by Norðurál, a wholly owned subsidiary of U.S.-basedCentury AluminumCompany. It is located inGrundartangiin Western Iceland near the town ofAkranes.Its former capacity was 220,000 mtpy but an expansion to 260,000 mtpy has already finished. In 2012 the plant produced 280,000 metric tons which was valued at 610 million dollars or 76 billion krónur. 4,300 gigawatts hours were used in the production that year, amounting to nearly one-fourth of all electrical energy produced in the country.[32]In October 2013, Norðurál announced the start of a five-year project aimed at increasing its production by a further 50,000 mtpy.[33]

United States-based aluminium manufacturerAlcoaruns a plant near the town ofReyðarfjörður.The plant, known asFjardaál(or "aluminium of thefjords"), has a capacity of 346,000 mtpy and was put into operation in April 2008. To power the plant,LandsvirkjunbuiltKárahnjúkar,a 690-MW[34]hydropower station. The project was enormous in the context of the Icelandic economy, increasing total installed electric power capacity from under 1,600 MW to around 2,300 MW.[35]

Alcoa's aluminium plant in Reyðarfjörður, Iceland

According to Alcoa, construction of Fjardaál entailed no human displacement, no impact onendangered species,and no danger to commercial fisheries; there will also be no significant effect on reindeer, bird and seal populations.[36]However, the project drew considerable opposition from environmentalist groups such as theWorld Wide Fund for Nature,which called on Alcoa to abandon the plan to build Fjardaál. In addition, Icelandic singerBjörkwas a notable early opponent to the plan; protesting the proposed construction, the singer's mother, Hildur Rúna Hauksdóttir, went on ahunger strikein 2002.[37]

Several other aluminium smelter projects have been planned. Between 2005 and 2011, Alcoa conducted a feasibility study for a second plant in Iceland nearHúsavík.[38]That plant was to have a 250,000 mtpy capacity, to be powered entirely bygeothermal power,although later estimates showed a potential need for other sources of power. In October 2011, Alcoa announced its decision to cancel the Bakki project.[39]In 2006, Nordurál signed a memorandum of understanding with two Icelandic geothermal power producers,Hitaveita SuðurnesjaandOrkuveita Reykjavíkur,to purchase electricity for its own aluminium reduction project inHelguvík.The power supplied will initially support aluminium production of 150,000 mtpy, which will eventually grow to support 250,000 mtpy.[40]

Fisheries[edit]

Fisheries and related sectors—in recent years labelled "the ocean cluster" —was the single most important part of the Icelandic economy (has now been replaced by tourism) representing an overall contribution to GDP of 27.1% in 2011.[41]The fisheries sector directly employs around 9,000 people (4,900 in fishing and 4,100 in fish processing; approximately 5 per cent of Iceland's workforce),[42]although it is estimated that a total of between 25,000 and 35,000 people (up to 20 per cent of the workforce) depend on the ocean cluster for their livelihood. Many of these jobs are provided by technological companies that manufacture equipment for fisheries firms and by companies engaged in the advanced processing of marine products or in biotechnical production. By contrast, aquaculture remains a very small industry in Iceland, employing only around 250 people for a production of 5,000 tonnes.[43]

Iceland is the second biggest fisheries nation in the North East Atlantic behindNorway,having overtaken theUnited Kingdomin the early 1990s. Since 2006, Icelandic fishing waters have yielded a total catch of between 1.1m and 1.4m tonnes of fish annually, although this is down from a peak of over 2m tonnes in 2003.[44]Iceland has been affected by a general decline in fishing yields in the Northeast Atlantic, with a one-way decrease of 18% from 2003 to 2009, although this trend appears to have been halted or reversed lately.

Codremains the most important species harvested by Icelandic fisheries, with a total catch of 178,516 tonnes in 2010. The catch of cod has stagnated in recent years due to quotas, and was supplemented by the catch ofblue whiting,which is used mainly for processing. The Icelandic catch of this previously insignificant fish increased from a negligible 369 tonnes in 1995 to a peak of 501,505 tonnes in 2003. Subsequently, the stock showed signs of instability and quotas were reduced, leading to a decline in the catch to 87,121 tonnes in 2010.[45]There have been increased numbers ofAtlantic mackerel,the "Miracle of the Mackerel." in the 21st century as the Atlantic Ocean has slightly warmed.[46]

Finance[edit]

See also:2008–2011 Icelandic financial crisis

Banks[edit]

Main article:List of banks in Iceland

The Icelandic banking system has been completely overhauled in wake of the2007–2008 financial crisis.There are now three majorcommercial banks,who areLandsbankinn(National Bank since 2008),Arion Bank(formerlyKaupthing Bank) andIslandsbanki(formerly Glitnir), andKvika banki(formerly MP Straumur). There are smaller banks and some savings banks however they are not publicly traded.

There has been extensive consolidation of smaller banks, withSparisjodur Keflavikurbeing taken over by Landsbanki and Byr being taken over by Islandsbanki. Arion Bank, Islandsbanki, and Kvika Banki are the only banks listed onIceland Stock Exchange.Arion Bank is mostly owned by foreign creditors while Landsbanki and Islandsbanki are now wholly owned by the State. The ownership stake of theIcelandic Statein the banks is managed byBankasysla rikisins(State Financia l Investments), which aims to privatise its shares in the banks in coming years.

Stock market[edit]

Because of historically persistent inflation, historical reliance on fish production and the long-standing public ownership of the commercial banks, equity markets were slow to develop. TheIceland Stock Exchangewas created in 1985. Trading in Icelandic T-Bonds began in 1986 and trading in equities commenced in 1990. All domestic trading in Icelandicstocks,bondsandmutual fundstakes place on the ICEX.

The ICEX has used electronic trading systems since its creation. Since 2000,SAXESS,the joint trading system of theNOREXalliance, has been used. There are currently two equities markets on the ICEX. TheMainMarket is the larger and better known of the two. The Alternative Market is a less regulated over-the-counter market. Because of the small size of the market, trading is illiquid in comparison with larger markets. A variety of firms across all sectors of the Icelandic economy are listed on the ICEX.

The most importantstock market indexwas theICEX 15;however, this index was discontinued in the wake of the financial crisis following a decade in which it had been the worst-performing stock market index in the entire world.

Other financial markets[edit]

Historically, investors tended to be reluctant to hold Icelandic bonds because of the persistence of high inflation and the volatility of the króna. What did exist was largely limited to bonds offered by the central government. The bond market on the ICEX has boomed in recent years, however, largely because of the resale of mortgages as housing bonds.

Amutual fundmarket exists on the ICEX in theory, but no funds are currently listed. A smallderivatives marketformerly existed, but was closed in 1999 because of illiquidity.

By the end of 2018,Bitcoin miningwas expected to consume more electricity in Iceland than all the country's residents combined.[47]

Data[edit]

GDP per capita development in Norway, Iceland, Denmark, Sweden and Finland
Labor union membership by country
Hours Worked Compared to Earnings Per Week

The following table shows the main economic indicators in 1980–2027. Estimates from 2020 and Inflation under 2% is in green.[48]

Year GDP
(in Bil. US$ PPP) 		GDP per capita
(in US$ PPP) 		GDP
(in Bil. US$ nominal) 		GDP growth
(real) 		Inflation rate
(in Percent) 		Unemployment
(in Percent) 		Government debt
(in % of GDP)
1980 2.5 10,686 3.4 Increase5.7 % Negative increase58.5 % 0.3 % n/a
1981 Increase2.8 Increase12,032 3.5 Increase4.3 % Negative increase50.9 % 0.4 % n/a
1982 Increase3.0 Increase12,868 3.3 Increase2.2 % Negative increase51.0 % Negative increase0.7 % 29.1 %
1983 Increase3.1 Increase12,931 2.8 Decrease−2.2 % Negative increase84.3 % Negative increase1.0 % Negative increase30.9 %
1984 Increase3.3 Increase13,815 2.9 Increase4.1 % Negative increase29.2 % Negative increase1.3 % Negative increase32.6 %
1985 Increase3.5 Increase14,630 3.0 Increase3.3 % Negative increase32.3 % Positive decrease0.9 % Positive decrease32.1 %
1986 Increase3.8 Increase15,733 4.0 Increase6.3 % Negative increase21.3 % Positive decrease0.7 % Positive decrease30.0 %
1987 Increase4.3 Increase17,273 5.6 Increase8.5 % Negative increase18.8 % Positive decrease0.4 % Positive decrease27.4 %
1988 Increase4.4 Increase17,553 6.1 Decrease−0.1 % Negative increase25.5 % Negative increase0.6 % Negative increase30.7 %
1989 Increase4.6 Increase18,148 5.7 Increase0.3 % Negative increase14.5 % Negative increase1.7 % Negative increase35.4 %
1990 Increase4.8 Increase18,884 6.5 Increase1.2 % Negative increase15.5 % Negative increase2.6 % Negative increase35.6 %
1991 Increase5.0 Increase19,180 6.9 Decrease−0.2 % Negative increase6.8 % Positive decrease2.5 % Negative increase37.7 %
1992 Decrease4.9 Decrease18,763 7.1 Decrease−3.4 % Negative increase4.0 % Negative increase4.2 % Negative increase45.5 %
1993 Increase5.1 Increase19,265 6.2 Increase1.3 % Negative increase4.1 % Negative increase5.3 % Negative increase52.4 %
1994 Increase5.4 Increase20,239 6.4 Increase3.6 % Increase1.6 % Steady5.3 % Negative increase54.9 %
1995 Increase5.5 Increase20,610 7.1 Increase0.1 % Increase1.7 % Positive decrease4.8 % Negative increase58.2 %
1996 Increase5.9 Increase21,834 7.4 Increase4.8 % Negative increase2.3 % Positive decrease3.7 % Positive decrease55.4 %
1997 Increase6.3 Increase23,084 7.6 Increase4.9 % Increase1.8 % Steady3.7 % Positive decrease52.2 %
1998 Increase6.8 Increase24,678 8.5 Increase7.1 % Increase1.7 % Positive decrease2.9 % Positive decrease43.9 %
1999 Increase7.2 Increase25,721 9.0 Increase3.9 % Negative increase3.2 % Positive decrease2.0 % Positive decrease39.2 %
2000 Increase7.7 Increase27,098 9.0 Increase4.6 % Negative increase5.1 % Negative increase2.2 % Positive decrease37.5 %
2001 Increase8.2 Increase28,481 8.2 Increase3.9 % Negative increase6.4 % Negative increase2.3 % Negative increase42.8 %
2002 Increase8.3 Increase28,886 9.3 Increase0.6 % Negative increase5.2 % Negative increase3.1 % Positive decrease39.4 %
2003 Increase8.7 Increase29,939 11.4 Increase2.4 % Negative increase2.1 % Negative increase3.4 % Positive decrease38.4 %
2004 Increase9.7 Increase32,905 13.8 Increase8.1 % Negative increase3.2 % Positive decrease3.1 % Positive decrease33.0 %
2005 Increase10.6 Increase35,374 16.9 Increase6.4 % Negative increase4.0 % Positive decrease2.6 % Positive decrease24.7 %
2006 Increase11.5 Increase37,322 17.5 Increase5.0 % Negative increase6.7 % Negative increase2.9 % Negative increase29.3 %
2007 Increase12.9 Increase40,892 21.7 Increase9.4 % Negative increase5.1 % Positive decrease2.3 % Positive decrease27.3 %
2008 Increase13.4 Increase41,867 18.1 Increase1.7 % Negative increase12.7 % Negative increase3.0 % Negative increase67.1 %
2009 Decrease12.6 Decrease39,657 13.2 Decrease−6.5 % Negative increase12.0 % Negative increase7.2 % Negative increase82.3 %
2010 Decrease12.3 Decrease38,594 13.8 Decrease−3.6 % Negative increase5.4 % Negative increase7.6 % Negative increase87.8 %
2011 Increase12.8 Increase40,022 15.2 Increase2.0 % Negative increase4.0 % Positive decrease7.1 % Negative increase94.7 %
2012 Increase13.2 Increase41,005 14.8 Increase3.9 % Negative increase5.2 % Positive decrease6.0 % Positive decrease92.1 %
2013 Increase13.9 Increase42,953 16.1 Increase4.3 % Negative increase3.9 % Positive decrease5.4 % Positive decrease84.3 %
2014 Increase15.6 Increase46,239 17.9 Increase2.2 % Increase2.0 % Positive decrease5.0 % Positive decrease81.8 %
2015 Increase16.3 Increase49,470 17.5 Increase4.4% Increase1.6 % Positive decrease4.0 % Positive decrease67.6 %
2016 Increase17.9 Increase53,986 20.8 Increase7.5 % Increase1.7 % Positive decrease3.0 % Positive decrease52.4 %
2017 Increase19.2 Increase56,904 24.7 Increase4.1 % Increase1.8 % Positive decrease2.8 % Positive decrease40.9 %
2018 Increase20.6 Increase59,382 26.3 Increase3.6 % Increase1.8 % Positive decrease2.8 % Positive decrease40.9 %
2019 Increase21.5 Increase60,428 24.7 Increase3.6 % Increase1.8 % Positive decrease2.8 % Positive decrease40.9 %
2020 Increase20.2 Decrease55,717 21.6 Decrease-7.9% Negative increase2.8% Negative increase6.4% Negative increase60.7%
2021 Increase22.1 Increase59,791 25.6 Increase4.3 Negative increase4.4% Positive decrease6.0% Positive decrease59.8%
2022 Increase24.1 Increase64,621 28.1 Increase3.2 Negative increase8.2% Positive decrease4.7% Positive decrease55.6%
2023 Increase25.5 Increase67,116 30.6 Increase2.3 Negative increase5.5% Steady4.0% Positive decrease52.0%
2024 Increase26.7 Increase69,357 34.1 Steady2.3 Negative increase3.7% Steady4.0% Positive decrease50.2%
2025 Increase27.9 Increase72,485 37.0 Steady2.3 Negative increase2.5% Steady4.0% Positive decrease48.0%
2026 Increase29.1 Increase75,717 39.9 Increase2.2 Negative increase2.5% Steady4.0% Positive decrease45.4%
2027 Increase30.3 Increase79,173 43.0 Steady2.2 Negative increase2.5% Steady4.0% Positive decrease42.6%

External trade[edit]

Iceland's economy is highly export-driven. Marine products account for the majority of goods exports. Other important exports include aluminium, ferro-silicon alloys, machinery and electronic equipment for the fishing industry, software, woollen goods. Most of Iceland's exports go to theEuropean Union(EU) andEuropean Free Trade Association(EFTA) countries, theUnited States,andJapan.The 2020 value of Iceland's exports was $7.43 billionFOB.[49]

The main imports are machinery and equipment,petroleumproducts, foodstuffs and textiles. Cement is Iceland's most imported product. The total 2020 value of imports was $7.55 billion. In 2019, Iceland's primary import partner wasNorway(11%), followed bythe Netherlands(10%),Germany(8%),Denmark(8%),United States(7%),United Kingdom(6%),PRC China(6%), andSweden(5%). Most agricultural products are subject to hightariffs;the import of some products, such as uncooked meat, is greatly restricted for phyto-sanitary reasons.[49][50]

Iceland's relatively liberal trading policy has been strengthened by accession to theEuropean Economic Areain 1993 and by theUruguay Round,which also brought significantly improved market access for Iceland's exports, particularlyseafoodproducts. However, the agricultural sector remains heavily subsidized and protected; sometariffsrange as high as 700%.

Thefishingindustry is one of the most important industries. It provides 40% ofexportincome and employs 7.0% of the workforce; therefore, the state of the economy remains sensitive to world prices for fish products.[49]

The following table should be considered in light of the dramatic depreciation of the currency in 2008 of approximately 50%, corrected to EUD or USD. Corrected in this manner imports since the 2007 peak have been negative, not positive. See Wikipedia entry onIcelandic króna.

Economic agreements and policies[edit]

Iceland became a fullEuropean Free Trade Associationmember in 1970 and entered into a free trade agreement with theEuropean Communityin 1973. Under the agreement on aEuropean Economic Area,effective January 1, 1994, there is basically free cross-border movement ofcapital,labor,goods,and services between Iceland,Norway,and the EU countries. However, many of Iceland's political parties remain opposed to EU membership, primarily because of Icelanders' concern about losing control over their fishing resources. Iceland also has bilateral free trade agreements with several countries outside the EEA. The most extensive of these is theHoyvík Agreementbetween Iceland and theFaroe Islands,this agreement goes even further than the EEA agreement by establishing free trade in agricultural products between the nations. Iceland has a free trade agreement with Mexico on November 27, 2000.

Currency and monetary policy[edit]

Main article:Icelandic króna

The currency of Iceland is thekróna(plural:krónur), issued exclusively by theCentral Bank of Icelandsince the bank's founding in 1961.[51]Iceland is the smallest country to have its own currency and monetary policy.[52][53][54][55]

During the 1970s the oil shocks (1973and1979 energy crisis) hit Iceland hard. Inflation rose to 43% in 1974 and 59% in 1980, falling to 15% in 1987 but rising to 30% in 1988. Iceland experienced moderately strong GDP growth (3% on average) from 1995 to 2004. Growth slowed between 2000 and 2002, but the economy expanded by 4.3% in 2003 and grew by 6.2% in 2004. Growth in 2005 exceeded 6%. Inflation averaged merely 1.5% from 1993 to 1994, and only 1.7% from 1994 to 1995. Inflation over 2006 topped at 8.6%, with a rate of 6.9% as of January 2007.Standard & Poor'sreduced their rating for Iceland to AA− from A+ (long term) in December 2006, following a loosening of fiscal policy by the Icelandic government ahead of the 2007 elections.[56][57]Foreign debt rose to more than five times the value of Iceland's GDP, and Iceland's Central Bank raised short-term interest rates to nearly 15% in 2007. Due to the plunging currency against the euro and dollar, in 2008 inflation was speculated to be at 20-25%.

Growth[edit]

Iceland's economy had been diversifying intomanufacturingandservice industriesin the 1990s, and new developments insoftwareproduction,biotechnology,andfinancial serviceswere taking place. Thetourism sectorwas also expanding, with the recent trends inecotourismandwhale watching.However, in 2008, the Icelandic economy entered a deeprecessionin correspondence to theglobal financial crisis.Although Iceland's economy grew 3.3% during the last quarter of 2009, the overall contraction in GDP over 2009 was 6.5%, less than the 10% originally forecasted by the IMF.[58][59]

See also[edit]

Notes[edit]

  1. ^"Groups and Aggregates Information".IMF.org.International Monetary Fund.
  2. ^"World Bank Country and Lending Groups".datahelpdesk.worldbank.org.World Bank.Retrieved29 September2019.
  3. ^"Statistics Iceland: The population increased by 2.0% in 2021".
  4. ^abcde"Report for Selected Countries and Subjects: April 2024".imf.org.International Monetary Fund.
  5. ^abcdefghijklmn"The World Factbook".CIA.gov.Central Intelligence Agency.Retrieved4 December2019.
  6. ^"Consumer price index".Statistics Iceland.Retrieved1 April2023.
  7. ^Statistics Iceland,Retrieved 4 August 2015
  8. ^"People at risk of poverty or social exclusion".ec.europa.eu/eurostat.Eurostat.
  9. ^"Gini coefficient of equivalised disposable income - EU-SILC survey".ec.europa.eu/eurostat.Eurostat.
  10. ^ab"Human Development Index (HDI)".hdr.undp.org.HDRO (Human Development Report Office)United Nations Development Programme.
  11. ^"Labor force, total - Iceland".data.worldbank.org.World Bank.Retrieved1 April2023.
  12. ^"Employment rate by sex, age group 20-64".ec.europa.eu/eurostat.Eurostat.Retrieved1 November2019.
  13. ^"Unemployment by sex and age - monthly average".appsso.eurostat.ec.europa.eu.Eurostat.Retrieved4 October2020.
  14. ^"Unemployment rate by age group".data.oecd.org.OECD.Retrieved8 September2020.
  15. ^abcIceland Ministry of Finance and Economic Affairs,Retrieved 22 September 2022
  16. ^Source: Statistics Iceland.
  17. ^abc"Tourism in Iceland: Here to stay?"(PDF).Research - all news - Arionbanki.Retrieved2018-05-14.
  18. ^ab"Economic Outlook: Caution, fragile!".Research - all news - Arionbanki.Archived fromthe originalon 2018-05-15.Retrieved2018-05-14.
  19. ^Christopher Mims."One Hot Island: Iceland's Renewable Geothermal Power".Scientific American.Retrieved3 March2015.
  20. ^Iceland: One of the world´s most free economiesArchived2008-09-13 at theWayback Machine,Invest in Iceland Agency
  21. ^Human Development IndexArchivedJuly 2, 2015, at theWayback Machine
  22. ^"Human Development Report 2007/2008 - Inequality measures, ratio of richest 10% to poorest 10%".Hdrstats.undp.org. 2010-11-04. Archived fromthe originalon 2009-02-12.Retrieved2012-02-20.
  23. ^"The Economy of Iceland".The Central Bank of Iceland. Archived fromthe originalon 2015-09-24.Retrieved2006-06-22.
  24. ^ab"Energy Data".Askja Energy - The Independent Icelandic Energy Portal.3 May 2012.Retrieved3 March2015.
  25. ^Presentation to the International Partnership for the Hydrogen EconomyArchived2007-06-27 at theWayback Machine,Icelandic Ministry of Industry and Commerce & Ministry for Foreign Affairs,published January 2005, accessed 2007-05-14
  26. ^"Increased belief in oil at Jan Mayen (in Norwegian)".GEO365.no. 22 November 2011. Archived fromthe originalon 25 April 2012.Retrieved23 November2011.
  27. ^"Oil possible in the Dragon zone (in Icelandic)".Mbl.is. 23 November 2011.Retrieved23 November2011.
  28. ^"Iceland one of five countries in the world most dependent on tourism".Icelandmag.Retrieved2018-08-14.
  29. ^"Number of employers and employees in October 2017 (1)".Hagstofa.Retrieved2018-05-14.
  30. ^"Economy of Iceland".Central Bank of Iceland. p. 23. Archived fromthe originalon 2015-09-24.Retrieved2006-06-22.
  31. ^"Aluminium overtakes fish in Iceland".Nordregio. Archived fromthe originalon 30 March 2017.Retrieved16 October2013.
  32. ^"Viðbótarstækkun Norðuráls flýtt".Norðurál. April 3, 2006. Archived fromthe originalon 2006-05-05.Retrieved2006-06-22.
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