Flag of Iceland

Iceland Economy Profile 2014

Home > Factbook > Countries > Iceland

Economy - overviewIceland's Scandinavian-type social-market economy combines a capitalist structure and free-market principles with an extensive welfare system. Prior to the 2008 crisis, Iceland had achieved high growth, low unemployment, and a remarkably even distribution of income. The economy depends heavily on the fishing industry, which provides 40% of export earnings, more than 12% of GDP, and employs nearly 5% of the work force. It remains sensitive to declining fish stocks as well as to fluctuations in world prices for its main exports: fish and fish products, aluminum, and ferrosilicon. Iceland's economy has been diversifying into manufacturing and service industries in the last decade, particularly within the fields of software production, biotechnology, and tourism. In fall 2013, the Icelandic government approved a joint application by Icelandic, Chinese and Norwegian energy firms to conduct oil exploration off Iceland’s northeast coast. 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, although the financial crisis has put several investment projects on hold. Much of Iceland's economic growth in recent years came as the result of a boom in domestic demand following the rapid expansion of the country's financial sector. Domestic banks expanded aggressively in foreign markets, and consumers and businesses borrowed heavily in foreign currencies, following the privatization of the banking sector in the early 2000s. 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 more than 10 times the country's GDP, became unsustainable. Iceland's three largest banks collapsed in late 2008. The country secured over $10 billion in loans from the IMF and other countries to stabilize its currency and financial sector, and to back government guarantees for foreign deposits in Icelandic banks. GDP fell 6.8% in 2009, and unemployment peaked at 9.4% in February 2009. 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. Three new banks were established to take over the domestic assets of the collapsed banks. Two of them have foreign majority ownership, while the State holds a majority of the shares of the third. Iceland began making payments to the UK, the Netherlands, and other claimants in late 2011 following Iceland's Supreme Court ruling that upheld 2008 emergency legislation that gives priority to depositors for compensation from failed Icelandic banks. Iceland owes British and Dutch authorities approximately $5.5 billion for compensating British and Dutch citizens who lost deposits in Icesave when parent bank Landsbanki failed in 2008. Iceland began accession negotiations with the EU in July 2010, but decided in mid-2013 to suspend negotiations with the EU because of concern about losing control over fishing resources and worries over the ongoing Eurozone crisis.
GDP (purchasing power parity)$13.11 billion (2013 est.)
$12.87 billion (2012 est.)
$12.66 billion (2011 est.)
note: data are in 2013 US dollars
GDP (official exchange rate)$14.59 billion (2013 est.)
GDP - real growth rate1.9% (2013 est.)
1.6% (2012 est.)
2.9% (2011 est.)
GDP - per capita (PPP)$40,700 (2013 est.)
$40,300 (2012 est.)
$39,800 (2011 est.)
note: data are in 2013 US dollars
Gross national saving15.4% of GDP (2013 est.)
9.3% of GDP (2012 est.)
8.1% of GDP (2011 est.)
GDP - composition, by end usehousehold consumption: 53.3%
government consumption: 24.9%
investment in fixed capital: 13.8%
investment in inventories: 2%
exports of goods and services: 56.4%
imports of goods and services: -50.4%
(2013 est.)
GDP - composition by sectoragriculture: 5.9%
industry: 22.9%
services: 71.2% (2013 est.)
Population below poverty lineNA%
note: 332,100 families (2011 est.)
Labor force181,100 (2013 est.)
Labor force - by occupationagriculture: 4.8%
industry: 22.2%
services: 73% (2008)
Unemployment rate4.5% (2013 est.)
5.8% (2012 est.)
Unemployment, youth ages 15-24total: 13.6%
male: 14.7%
female: 12.4% (2012)
Household income or consumption by percentage sharelowest 10%: NA%
highest 10%: NA%
Distribution of family income - Gini index28 (2006)
25 (2005)
Budgetrevenues: $6.231 billion
expenditures: $6.448 billion (2013 est.)
Taxes and other revenues42.7% of GDP (2013 est.)
Budget surplus (+) or deficit (-)-1.5% of GDP (2013 est.)
Public debt130.5% of GDP (2013 est.)
131.8% of GDP (2012 est.)
Inflation rate (consumer prices)3.9% (2013 est.)
$NA (2012 est.)
Central bank discount rate5.4% (31 January 2012 est.)
5.75% (31 December 2010 est.)
Commercial bank prime lending rate9.3% (31 December 2013 est.)
8.33% (31 December 2012 est.)
Stock of narrow money$3.876 billion (31 December 2013 est.)
$3.562 billion (31 December 2012 est.)
Stock of broad money$7.152 billion (31 December 2012 est.)
$7.006 billion (31 December 2012 est.)
Stock of domestic credit$19.35 billion (31 December 2013 est.)
$18.96 billion (31 December 2012 est.)
Market value of publicly traded shares$2.825 billion (31 December 2012 est.)
$2.021 billion (31 December 2011)
$1.996 billion (31 December 2010 est.)
Agriculture - productspotatoes, green vegetables; mutton, chicken, pork, beef, dairy products; fish
Industriesfish processing; aluminum smelting, ferrosilicon production; geothermal power, hydropower, tourism
Industrial production growth rate-1% (2013 est.)
Current Account Balance-$100 million (2013 est.)
-$740 million (2012 est.)
Exports$5.2 billion (2013 est.)
$5.06 billion (2012 est.)
Exports - commoditiesfish and fish products 40%, aluminum, animal products, ferrosilicon, diatomite
Exports - partnersNetherlands 30%, Germany 12.9%, UK 9.8%, Norway 5.1%, US 4.5%, France 4.4% (2012)
Imports$4.526 billion (2013 est.)
$4.441 billion (2012 est.)
Imports - commoditiesmachinery and equipment, petroleum products, foodstuffs, textiles
Imports - partnersNorway 16.6%, US 10.2%, Germany 9.2%, China 7.2%, Brazil 6.7%, Netherlands 6%, Denmark 5.7%, UK 4.6% (2012)
Reserves of foreign exchange and gold$5.604 billion (31 December 2013 est.)
$4.192 billion (31 December 2012 est.)
Debt - external$102 billion (31 December 2012 est.)
$110.8 billion (31 December 2011 est.)
Stock of direct foreign investment - at home$NA
$9.2 billion (31 December 2008)
Stock of direct foreign investment - abroad$NA
$8.8 billion (31 December 2008)
Exchange ratesIcelandic kronur (ISK) per US dollar -
123.7 (2013 est.)
125.08 (2012 est.)
122.24 (2010 est.)
123.64 (2009)
85.619 (2008)
Fiscal yearcalendar year

Source: CIA World Factbook
Unless otherwise noted, information in this page is accurate as of August 23, 2014