Iceland Economy Profile 2008

Economy - overview

Iceland's Scandinavian-type economy is basically capitalistic, yet with an extensive welfare system (including generous housing subsidies), low unemployment, and remarkably even distribution of income. In the absence of other natural resources (except for abundant geothermal power), the economy depends heavily on the fishing industry, which provides 70% of export earnings and employs 6% of the work force. The economy 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. Substantial foreign investment in the aluminum and hydropower sectors has boosted economic growth which, nevertheless, has been volatile and characterized by recurrent imbalances. Government policies include reducing the current account deficit, limiting foreign borrowing, containing inflation, revising agricultural and fishing policies, and diversifying the economy. The government remains opposed to EU membership, primarily because of Icelanders' concern about losing control over their fishing resources. Iceland's economy has been diversifying into manufacturing and service industries in the last decade, and new developments in software production, biotechnology, and financial services are taking place. The tourism sector is also expanding, with the recent trends in ecotourism and whale watching. The 2006 closure of the US military base at Keflavik had very little impact on the national economy; Iceland's low unemployment rate aided former base employees in finding alternate employment.

GDP (purchasing power parity)

$11.89 billion (2007 est.)

GDP (official exchange rate)

$19.52 billion (2007 est.)

GDP - real growth rate

1.8% (2007 est.)

GDP - per capita (PPP)

$39,400 (2007 est.)

GDP - composition by sector

agriculture: 5.3%
industry: 26.3%
services: 68.4% (2007 est.)

Population below poverty line

NA%

Household income or consumption by percentage share

lowest 10%: NA%
highest 10%: NA%

Inflation rate (consumer prices)

4.9% (2007 est.)

Investment (gross fixed)

25.5% of GDP (2007 est.)

Labor force

180,000 (2007 est.)

Labor force - by occupation

agriculture: 5.1%
industry: 23%
services: 71.8% (2005)

Unemployment rate

1% (2007 est.)

Distribution of family income - Gini index

25 (2005)

Budget

revenues: $9.495 billion
expenditures: $8.432 billion (2007 est.)

Public debt

27.7% of GDP (2007 est.)

Industries

fish processing; aluminum smelting, ferrosilicon production; geothermal power, tourism

Industrial production growth rate

9% (2007 est.)

Electricity - production

8.533 billion kWh (2005)

Electricity - consumption

8.152 billion kWh (2005)

Electricity - exports

0 kWh (2005)

Electricity - imports

0 kWh (2005)

Oil - production

0 bbl/day (2005 est.)

Oil - consumption

18,460 bbl/day (2005 est.)

Oil - imports

17,450 bbl/day (2004)

Oil - exports

0 bbl/day (2004)

Oil - proved reserves

0 bbl (1 January 2006 est.)

Natural gas - production

0 cu m (2005 est.)

Natural gas - consumption

0 cu m (2005 est.)

Natural gas - exports

0 cu m (2005 est.)

Natural gas - imports

0 cu m (2005)

Natural gas - proved reserves

0 cu m (1 January 2006 est.)

Current Account Balance

-$3.384 billion (2007 est.)

Agriculture - products

potatoes, green vegetables; mutton, dairy products; fish

Exports

$4.569 billion f.o.b. (2007 est.)

Exports - commodities

fish and fish products 70%, aluminum, animal products, ferrosilicon, diatomite

Exports - partners

Netherlands 16.5%, UK 15.7%, Germany 15%, US 10.8%, Spain 6.4% (2006)

Imports

$5.777 billion (2007 est.)

Imports - commodities

machinery and equipment, petroleum products, foodstuffs, textiles

Imports - partners

US 12.8%, Germany 12.3%, Norway 7.1%, Sweden 6.9%, Denmark 6.1%, UK 5.3%, China 5.3%, Netherlands 4.8%, Japan 4.1% (2006)

Reserves of foreign exchange and gold

$2.436 billion (31 December 2007 est.)

Debt - external

$3.073 billion (2002)

Stock of direct foreign investment - at home

$NA

Stock of direct foreign investment - abroad

$NA

Market value of publicly traded shares

$27.8 billion (2005)

Economic aid - donor

$6.7 million (2004)

Currency (code)

Icelandic krona (ISK)

Exchange rates

Icelandic kronur per US dollar - 63.391 (2007), 70.195 (2006), 62.982 (2005), 70.192 (2004), 76.709 (2003)

Fiscal year

calendar year