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Iceland Economy 1996

Overview:

Iceland's Scandinavian-type economy is basically capitalistic, but with an extensive welfare system, relatively low unemployment, and comparatively even distribution of income. The economy is heavily dependent on the fishing industry, which provides nearly 75% of export earnings and employs 12% of the work force. In the absence of other natural resources - except energy - Iceland's economy is vulnerable to changing world fish prices. The economy, in recession since 1988, began to recover in 1993, posting 0.4% growth, but was still hampered by cutbacks in fish quotas as well as falling world prices for its main exports: fish and fish products, aluminum, and ferrosilicon. Real GDP grew by perhaps 2.4% in 1994. The center-right government plans to continue its policies of reducing the budget and current account deficits, limiting foreign borrowing, containing inflation, revising agricultural and fishing policies, diversifying the economy, and privatizing state-owned industries. The government, however, remains divided on the issue of EU membership, primarily because of Icelanders' concern about losing control over their fishing resources.

National product:

GDP - purchasing power parity - $4.5 billion (1994 est.)

National product real growth rate:

2.4% (1994 est.)

National product per capita:

$17,250 (1994 est.)

Inflation rate (consumer prices):

1.3% (1994 est.)

Unemployment rate:

7% (1994 est.)

Budget:

revenues:

$1.9 billion

expenditures:

$2.1 billion, including capital expenditures of $NA (1994 est.)

Exports:

$1.4 billion (f.o.b., 1993)

commodities:

fish and fish products, animal products, aluminum, ferrosilicon, diatomite

partners:

EC 68% (UK 25%, Germany 12%), US 11%, Japan 8% (1992)

Imports:

$1.3 billion (c.i.f., 1993)

commodities:

machinery and transportation equipment, petroleum products, foodstuffs, textiles

partners:

EC 53% (Germany 14%, Denmark 10%, UK 9%), Norway 14%, US 9% (1992)

External debt:

$2.5 billion (1993 est.)

Industrial production:

growth rate 1.75% (1991 est.)

Electricity:

capacity:

1,070,000 kW

production:

4.7 billion kWh

consumption per capita:

16,458 kWh (1993)

Industries:

fish processing, aluminum smelting, ferro-silicon production, geothermal power

Agriculture:

accounts for about 15% of GDP; fishing is most important economic activity, contributing nearly 75% to export earnings; principal crops - potatoes, turnips; livestock - cattle, sheep; fish catch of about 1.1 million metric tons in 1992

Economic aid:

recipient:

US commitments, including Ex-Im (FY70-81), $19.1 million

Currency:

1 Icelandic krona (IKr) = 100 aurar

Exchange rates:

Icelandic kronur (IKr) per US$1 - 67.760 (January 1995), 69.944 (1994), 67.603 (1993), 57.546 (1992), 58.996 (1991), 58.284 (1990)

Fiscal year:

calendar year

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