Economy of Iceland

Economy of Iceland
Reykjavík
CurrencyIcelandic króna (ISK, kr)
Calendar year
Trade organisations
EFTA, EEA, OECD, WTO
Country group
Statistics
PopulationIncrease 400,000 (2024)[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 below poverty line
  • 8% – income below 1,200€/ month (2015)[7]
  • 11.6% at risk of poverty or social exclusion (AROPE 2019)[8]
23.7 low (2019)[9]
Decrease 72 out of 100 points (2023)[11] (19th)
Labour force
  • Increase 222,391 (2021)[12]
  • Increase 85.3% employment rate (2023)[13]
Labour force by occupation
Unemployment
  • Steady 5.1% (February 2023)[14]
  • Positive decrease 9.9% youth unemployment (15 to 24 year-olds; July 2020)[15]
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
FDI stock
  • Decrease $6.666 billion (31 December 2017 est.)[5]
  • Decrease Abroad: $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 decrease 40% 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[16]
  • A-2 (Foreign)
  • A-2 (Domestic)
  • Outlook: Stable
Standard & Poor's[16]
  • A (Foreign)
  • A (Domestic)
  • Outlook: Stable
Fitch[16]
  • A (Foreign)
  • A (Domestic)
  • Outlook: Stable
Decrease $6.567 billion (31 December 2017 est.)[5]
All values, unless otherwise stated, are in US dollars.

The economy of Iceland is small and subject to high volatility. In 2011, gross domestic product was US$12 billion, but by 2018 it had increased to a nominal GDP of US$27 billion. With a population of 387,000, this is $55,000 per capita, based on purchasing power parity (PPP) estimates.[17] The 2008–2011 Icelandic financial crisis produced a decline in GDP and employment, which has since been reversed entirely by a recovery aided by a tourism boom starting in 2010. Tourism accounted for more than 10% of Iceland's GDP in 2017.[18] 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.[19]

Iceland has a mixed economy with high levels of free trade and government intervention. However, government consumption is less than other Nordic countries. Hydro-power is the primary source of home and industrial electrical supply in Iceland.[20]

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 of economic freedom[21] as well as civil freedoms. In 2007, Iceland topped the list of nations ranked by Human Development Index[22] and was one of the most egalitarian, according to the calculation provided by the Gini coefficient.[23]

From 2006 onwards, the economy faced problems of growing inflation and current account deficits. Partly in response, and partly as a result of earlier reforms, the financial system expanded rapidly before collapsing entirely in the 2008–2011 Icelandic financial crisis. Iceland had to obtain emergency funding from the International Monetary Fund and a range of European countries in November 2008. The economy has since rebounded, beginning in 2010.

Iceland bonds had an Inverted yield curve in 2008
  10 year bonds
  5 year bonds
  2 year bonds
  1. ^ "Groups and Aggregates Information". IMF.org. International Monetary Fund.
  2. ^ "World Bank Country and Lending Groups". datahelpdesk.worldbank.org. World Bank. Retrieved 29 September 2019.
  3. ^ "Statistics Iceland: The population increased by 2.0% in 2021".
  4. ^ a b c d e "Report for Selected Countries and Subjects: April 2024". imf.org. International Monetary Fund.
  5. ^ a b c d e f g h i j k l m n "The World Factbook". CIA.gov. Central Intelligence Agency. Retrieved 4 December 2019.
  6. ^ "Consumer price index". Statistics Iceland. Retrieved 1 April 2023.
  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. ^ a b "Human Development Index (HDI)". hdr.undp.org. HDRO (Human Development Report Office) United Nations Development Programme.
  11. ^ "Corruption Perceptions Index". Transparency International. 30 January 2024. Archived from the original on 30 January 2024. Retrieved 15 July 2024.
  12. ^ "Labor force, total - Iceland". data.worldbank.org. World Bank. Retrieved 1 April 2023.
  13. ^ "Employment rate by sex, age group 20-64". ec.europa.eu/eurostat. Eurostat. Retrieved 20 July 2024.
  14. ^ "Unemployment by sex and age - monthly average". appsso.eurostat.ec.europa.eu. Eurostat. Retrieved 4 October 2020.
  15. ^ "Unemployment rate by age group". data.oecd.org. OECD. Retrieved 8 September 2020.
  16. ^ a b c Iceland Ministry of Finance and Economic Affairs, Retrieved 22 September 2022
  17. ^ Source: Statistics Iceland.
  18. ^ Cite error: The named reference Tourism was invoked but never defined (see the help page).
  19. ^ "Economic Outlook: Caution, fragile!". Research - all news - Arionbanki. Archived from the original on 2018-05-15. Retrieved 2018-05-14.
  20. ^ Christopher Mims. "One Hot Island: Iceland's Renewable Geothermal Power". Scientific American. Retrieved 3 March 2015.
  21. ^ Iceland: One of the world´s most free economies Archived 2008-09-13 at the Wayback Machine, Invest in Iceland Agency
  22. ^ Human Development Index Archived July 2, 2015, at the Wayback Machine
  23. ^ "Human Development Report 2007/2008 - Inequality measures, ratio of richest 10% to poorest 10%". Hdrstats.undp.org. 2010-11-04. Archived from the original on 2009-02-12. Retrieved 2012-02-20.