Economy - 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 achieved high growth, low unemployment, and a remarkably even distribution of income. The economy depends heavily on the fishing industry, which provides 40% of merchandise 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. 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'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.
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. 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. 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. Most macroeconomic indicators and employment have rebounded to pre-crisis levels, driven primarily by the unprecedented growth in tourism – averaging over 20% annually – following the well-publicized volcanic eruption in 2010.
GDP (purchasing power parity):
$17.73 billion (2017 est.)
$16.8 billion (2016 est.)
$15.67 billion (2015 est.)
note: data are in 2017 dollars
country comparison to the world: 153
GDP (official exchange rate):
$24.85 billion (2017 est.)
GDP - real growth rate:
5.5% (2017 est.)
7.2% (2016 est.)
4.1% (2015 est.)
country comparison to the world: 29
GDP - per capita (PPP):
$52,100 (2017 est.)
$50,000 (2016 est.)
$47,100 (2015 est.)
note: data are in 2017 dollars
country comparison to the world: 24
Gross national saving:
28.1% of GDP (2017 est.)
29.3% of GDP (2016 est.)
24.5% of GDP (2015 est.)
country comparison to the world: 34
GDP - composition, by end use:
household consumption: 49%
government consumption: 22.2%
investment in fixed capital: 21.9%
investment in inventories: 0.1%
exports of goods and services: 49.6%
imports of goods and services: -42.6% (2017 est.)
GDP - composition, by sector of origin:
agriculture: 5.8%
industry: 19.8%
services: 74.4% (2017 est.)
Agriculture - products:
potatoes, carrots, green vegetables, tomatoes, cucumbers; mutton, chicken, pork, beef, dairy products; fish
Industries:
tourism, fish processing; aluminum smelting;; geothermal power, hydropower; medical/pharmaceutical products
Industrial production growth rate:
2.4% (2017 est.)
country comparison to the world: 117
Labor force:
198,700 (2017 est.)
country comparison to the world: 172
Labor force - by occupation:
agriculture: 4.8%
industry: 22.2%
services: 73% (2008 est.)
Unemployment rate:
2.8% (2017 est.)
3% (2016 est.)
country comparison to the world: 29
Population below poverty line:
NA%
note: 332,100 families (2011 est.)
Household income or consumption by percentage share:
lowest 10%: NA%
highest 10%: NA%
Distribution of family income - Gini index:
28 (2006 est.)
25 (2005 est.)
country comparison to the world: 140
Budget:
revenues: $9.962 billion
expenditures: $9.735 billion (2017 est.)
Taxes and other revenues:
40.1% of GDP (2017 est.)
country comparison to the world: 34
Budget surplus (+) or deficit (-):
0.9% of GDP (2017 est.)
country comparison to the world: 17
Public debt:
47.4% of GDP (2017 est.)
54.5% of GDP (2016 est.)
country comparison to the world: 107
Fiscal year:
calendar year
Inflation rate (consumer prices):
1.8% (2017 est.)
1.7% (2016 est.)
country comparison to the world: 83
Central bank discount rate:
5.4% (31 January 2012 est.)
5.75% (31 December 2010 est.)
country comparison to the world: 78
Commercial bank prime lending rate:
7.6% (31 December 2017 est.)
8.24% (31 December 2016 est.)
country comparison to the world: 113
Stock of narrow money:
$4.653 billion (31 December 2017 est.)
$4.251 billion (31 December 2016 est.)
country comparison to the world: 108
Stock of broad money:
$8.506 billion (31 December 2016 est.)
$8.693 billion (31 December 2016 est.)
country comparison to the world: 111
Stock of domestic credit:
$19.78 billion (31 December 2017 est.)
$21.18 billion (31 December 2016 est.)
country comparison to the world: 93
Market value of publicly traded shares:
$2.825 billion (31 December 2012 est.)
$2.021 billion (31 December 2011 est.)
$1.996 billion (31 December 2010 est.)
country comparison to the world: 96
Current account balance:
$1.54 billion (2017 est.)
$1.589 billion (2016 est.)
country comparison to the world: 34
Exports:
$4.6 billion (2017 est.)
$4.483 billion (2016 est.)
country comparison to the world: 113
Exports - commodities:
fish and fish products (42%), aluminum (38%), agricultural products, medicinal and medical products, ferro-silicon (2015)
Exports - partners:
Netherlands 25.4%, UK 11.3%, Spain 10.5%, US 7.8%, Germany 7%, France 6.7%, Norway 4.2% (2016)
Imports:
$5.674 billion (2017 est.)
$5.315 billion (2016 est.)
country comparison to the world: 117
Imports - commodities:
machinery and equipment, petroleum products, foodstuffs, textiles
Imports - partners:
Germany 10.1%, US 10%, Norway 9.1%, Netherlands 7.5%, China 7.4%, Denmark 6.1%, UK 5.8% (2016)
Reserves of foreign exchange and gold:
$6.14 billion (31 December 2017 est.)
$7.226 billion (31 December 2016 est.)
country comparison to the world: 89
Debt - external:
$27.14 billion (31 December 2017 est.)
$25.02 billion (31 December 2016 est.)
country comparison to the world: 86
Stock of direct foreign investment - at home:
$12.89 billion (31 December 2017 est.)
$13.89 billion (31 December 2016 est.)
country comparison to the world: 94
Stock of direct foreign investment - abroad:
$15.54 billion (31 December 2017 est.)
$17.64 billion (31 December 2016 est.)
country comparison to the world: 59
Exchange rates:
Icelandic kronur (ISK) per US dollar -
111.7 (2017 est.)
120.81 (2016 est.)
120.81 (2015 est.)
131.92 (2014 est.)
116.77 (2013 est.)