Ice Economy - 2022

GEOGRAPHICAL NAMES 

Economic overview

Iceland's economy combines a capitalist structure and free-market principles with an extensive welfare system. Except for a brief period during the 2008 crisis, Iceland has in recent years achieved high growth, low unemployment, and a remarkably even distribution of income. Iceland's economy has been diversifying into manufacturing and service industries in the last decade, particularly within the fields of tourism, software production, and biotechnology. Abundant geothermal and hydropower sources have attracted substantial foreign investment in the aluminum sector, boosted economic growth, and sparked some interest from high-tech firms looking to establish data centers using cheap green energy.

 

Tourism, aluminum smelting, and fishing are the pillars of the economy. For decades the Icelandic economy depended heavily on fisheries, but tourism has now surpassed fishing and aluminum as Iceland’s main export industry. Tourism accounted for 8.6% of Iceland’s GDP in 2016, and 39% of total exports of merchandise and services. From 2010 to 2017, the number of tourists visiting Iceland increased by nearly 400%. Since 2010, tourism has become a main driver of Icelandic economic growth, with the number of tourists reaching 4.5 times the Icelandic population in 2016. Iceland remains sensitive to fluctuations in world prices for its main exports, and to fluctuations in the exchange rate of the Icelandic Krona.

 

Following the privatization of the banking sector in the early 2000s, domestic banks expanded aggressively in foreign markets, and consumers and businesses borrowed heavily in foreign currencies. Worsening global financial conditions throughout 2008 resulted in a sharp depreciation of the krona vis-a-vis other major currencies. The foreign exposure of Icelandic banks, whose loans and other assets totaled nearly nine times the country's GDP, became unsustainable. Iceland's three largest banks collapsed in late 2008. GDP fell 6.8% in 2009, and unemployment peaked at 9.4% in February 2009. Three new banks were established to take over the domestic assets of the collapsed banks. Two of them have majority ownership by the state, which intends to re-privatize them.

 

Since the collapse of Iceland's financial sector, government economic priorities have included stabilizing the krona, implementing capital controls, reducing Iceland's high budget deficit, containing inflation, addressing high household debt, restructuring the financial sector, and diversifying the economy. Capital controls were lifted in March 2017, but some financial protections, such as reserve requirements for specified investments connected to new inflows of foreign currency, remain in place.

Real GDP (purchasing power parity)

$19.16 billion (2020 est.)

$20.52 billion (2019 est.)

$20.01 billion (2018 est.)

note: data are in 2017 dollars

Real GDP growth rate

1.94% (2019 est.)

3.88% (2018 est.)

4.57% (2017 est.)

Real GDP per capita

$52,300 (2020 est.)

$56,900 (2019 est.)

$56,700 (2018 est.)

note: data are in 2017 dollars

GDP (official exchange rate)

$24.614 billion (2019 est.)

Inflation rate (consumer prices)

3% (2019 est.)

2.6% (2018 est.)

1.7% (2017 est.)

Credit ratings

Fitch rating: A (2017)

Moody's rating: A2 (2019)

Standard & Poors rating: A (2017)

note: The year refers to the year in which the current credit rating was first obtained.

GDP - composition, by sector of origin

agriculture: 5.8% (2017 est.)

industry: 19.7% (2017 est.)

services: 74.6% (2017 est.)

GDP - composition, by end use

household consumption: 50.4% (2017 est.)

government consumption: 23.3% (2017 est.)

investment in fixed capital: 22.1% (2017 est.)

investment in inventories: 0% (2017 est.)

exports of goods and services: 47% (2017 est.)

imports of goods and services: -42.8% (2017 est.)

Agricultural products

milk, mutton, poultry, potatoes, barley, pork, eggs, beef, other meat, sheep skins

Industries

tourism, fish processing; aluminum smelting; geothermal power, hydropower; medical/pharmaceutical products

Industrial production growth rate

2.4% (2017 est.)

Labor force

200,000 (2020 est.)

Labor force - by occupation

agriculture: 4.8%

industry: 22.2%

services: 73% (2008)

Unemployment rate

3.62% (2019 est.)

2.73% (2018 est.)

Youth unemployment rate (ages 15-24)

total: 12%

male: 13.2%

female: 10.7% (2021 est.)

Population below poverty line

8.8% (2017 est.)

Gini Index coefficient - distribution of family income

26.8 (2015 est.)

25 (2005)

Household income or consumption by percentage share

lowest 10%: NA

highest 10%: NA

Budget

revenues: 10.39 billion (2017 est.)

expenditures: 10.02 billion (2017 est.)

Budget surplus (+) or deficit (-)

1.5% (of GDP) (2017 est.)

Public debt

40% of GDP (2017 est.)

51.7% of GDP (2016 est.)

Taxes and other revenues

42.4% (of GDP) (2017 est.)

Fiscal year

calendar year

Current account balance

$1.496 billion (2019 est.)

$814 million (2018 est.)

Exports

$7.43 billion (2020 est.) note: data are in current year dollars

$11.01 billion (2019 est.) note: data are in current year dollars

$12.26 billion (2018 est.) note: data are in current year dollars

Exports - partners

Netherlands 23%, United Kingdom 9%, Germany 9%, Spain 8%, United States 7%, France 7%, Canada 5% (2019)

Exports - commodities

aluminum and aluminum products, fish products, aircraft, iron alloys, animal meal (2019)

Imports

$7.55 billion (2020 est.) note: data are in current year dollars

$9.76 billion (2019 est.) note: data are in current year dollars

$11.34 billion (2018 est.) note: data are in current year dollars

Imports - partners

Norway 11%, Netherlands 10%, Germany 8%, Denmark 8%, United States 7%, United Kingdom 6%, China 6%, Sweden 5% (2019)

Imports - commodities

refined petroleum, aluminum oxide, carbon/graphite electronics, cars, packaged medicines (2019)

Reserves of foreign exchange and gold

$6.567 billion (31 December 2017 est.)

$7.226 billion (31 December 2016 est.)

Debt - external

$19.422 billion (2019 est.)

$22.055 billion (2018 est.)

Exchange rates

Icelandic kronur (ISK) per US dollar -

127.05 (2020 est.)

121.68 (2019 est.)

121.86 (2018 est.)

131.92 (2014 est.)

116.77 (2013 est.)

NOTE: The information regarding Ice on this page is re-published from the 2022 World Fact Book of the United States Central Intelligence Agency and other sources. No claims are made regarding the accuracy of Ice 2022 information contained here. All suggestions for corrections of any errors about Ice 2022 should be addressed to the CIA or the source cited on each page.