Iceland

Capital: Reykjavik

Local time:
It is %T:%M %A in Reykjavik

GDP growth rate: 3.1% in 2013

FDI stock: 11 771 million USD in 2010

Economic trends

After a period of continuous growth between the second half of the 1990s and 2007, Iceland was badly hit by the global international crisis since October 2008. The rapid expansion of the Icelandic financial system left Iceland completely vulnerable to affront the international financial shocks, up to the point of practically inducing the country into a situation of "national bankruptcy".  On top of this, during the last recent years, Iceland's economy has been stimulated by a real estate boom, which contributed to destabilizing the economic situation even more.

Confronted to the total collapse of its financial system, the former government of Geeir Haarde had to nationalize the country's main banks. However, inflation continues to climb (reaching almost 18.6% today).  In November 2008, the IMF granted a loan of USD 2 billion in order to stabilize the Icelandic krona's exchange rate, which has suffered considerably due to the crisis, and to re-establish confidence in the economy. In order to benefit from European aid and from the protection that the Euro currency provides, Iceland requested in July 2009  a candidature for its accession to the European Union.  However, this project of becoming a member of the EU has not obtained the support of the population and the issue will have to pass through a popular referendum. Unemployment has been decreasing and is now at 7.6%. In 2011 the growth rate was 2.6% (after a decline of 4% in the previous year). The economic outlook for 2012 remains very uncertain, all the more so because the country must settle its dispute with the United Kingdom and the Netherlands, concering the bankrupcy of the Icelanding bank IceSave.

Main branches of industry

The agricultural sector contributes 7% to the GDP, the industrial sector to more than 25% and services to more than 68%.

The Icelandic economy relies partly in its renewable natural resources and its related industries: deep sea fishing, hydraulic and geothermal power and pastures. 

Fishing accounts for almost 6% of GDP (11% with the processing sector and over 18% when counting its indirect contribution).

It has been several years that its economy has also grown thanks to the services sector. As a fact, Iceland has become the rear-base of several companies specialized in computers and software. There are also many calling centers in the Icelandic territory.

International trade

Iceland has always been open to international trade. Almost half of the exports are fishing products. Iceland also exports aluminum and ferrosilicon (around 40% of its total exports), as well as dairy products. Tourism has been on the rise since 2011, stimulated by the collapse of the national currency. Certain traditional sectors, such as fishing, are doing well, which stimulates the dynamism of the exports.

Iceland's main customers are the United Kingdom (19% of exports), the USA (17.5%), as well as Germany and France (6% respectively).

Its main suppliers are the UK (27% of imports), the USA (20%) and Germany (10%).