Economy of Iceland

Economy of Iceland

Reykjavík
Currency	Icelandic króna (ISK, kr)
Fiscal year	Calendar year
Trade organisations	EFTA, EEA, OECD, WTO
Country group	Advanced economy[1] High-income economy[2]
Statistics
Population	387,758 (1 January 2023)[3]
GDP	$31 billion (nominal, 2023)[4] $28 billion (PPP, 2023)[4]
GDP rank	112th (nominal, 2023) 149th (PPP, 2023)
GDP growth	4.1% (2023) 1.7% (2024) 2.0% (2025)[4]
GDP per capita	$80,000 (nominal, 2023)[4] $72,000 (PPP, 2023)[4]
GDP per capita rank	8th (nominal, 2023) 14th (PPP, 2023)
GDP by sector	agriculture: 5.8% industry: 19.7% services: 74.6% (2017 est.)[5]
Inflation (CPI)	9.8% (March 2023)[6]
Population below poverty line	8% – income below 1,200€/ month (2015)[7] 11.6% at risk of poverty or social exclusion (AROPE 2019)[8]
Gini coefficient	23.7 low (2019)[9]
Human Development Index	0.959 very high (2022)[10] (3rd) 0.910 very high IHDI (1st) (2022)[10]
Labour force	222,391 (2021)[11] 86.5% employment rate (2018)[12]
Labour force by occupation	agriculture: 4.8% industry: 22.2% services: 73% (2008)[5]
Unemployment	5.1% (February 2023)[13] 9.9% youth unemployment (15 to 24 year-olds; July 2020)[14]
Average gross salary	553,000 ISK / €4,000 month
Average net salary	388,000 ISK / €2,800 month
Main industries	tourism, fish processing; aluminum smelting; geothermal power, hydropower; medical/pharmaceutical products
External
Exports	$9.775 billion (2021 est)[5]
Export goods	fish and fish products (42%), aluminum (38%), agricultural products, medicinal and medical products, ferro-silicon (2015)
Main export partners	Netherlands 23%  United Kingdom 9%  Germany 9%  Spain 8%  United States 7.0%  France 7%  Canada 5% (2019)[5]
Imports	$10.234 billion (2021 est.)
Import goods	refined petroleum, aluminum oxide, carbon/graphite electronics, cars, packaged medicines (2019)
Main import partners	Norway 11%  Netherlands 10%  Germany 8%  Denmark 8%  United States 7%  China 6%  United Kingdom 6%  Sweden 5% (2021)[5]
FDI stock	$6.666 billion (31 December 2017 est.)[5] Abroad: $11.24 billion (31 December 2017 est.)[5]
Current account	$857 million (2017 est.)[5]
Gross external debt	$21.7 billion (31 December 2017 est.)[5]
Public finances
Government debt	40% of GDP (2017 est.)[5]
Budget balance	+1.5% (of GDP) (2017 est.)[5]
Revenues	10.39 billion (2017 est.)[5]
Expenses	10.02 billion (2017 est.)[5]
Economic aid	c. $40 million (0.24% GDP, 2015 budget)
Credit rating	Moody's Investors Service[15] A-2 (Foreign) A-2 (Domestic) Outlook: Stable Standard & Poor's[15] A (Foreign) A (Domestic) Outlook: Stable Fitch[15] A (Foreign) A (Domestic) Outlook: Stable
Foreign reserves	$6.567 billion (31 December 2017 est.)[5]
All values, unless otherwise stated, are in US dollars.

The economy of Iceland is small and subject to high volatility. In 2011, gross domestic product was US$12 billion, but by 2018 it had increased to a nominal GDP of US$27 billion. With a population of 387,000, this is $55,000 per capita, based on purchasing power parity (PPP) estimates.^[16] The 2008–2011 Icelandic financial crisis produced a decline in GDP and employment that has since been reversed entirely by a recovery aided by a tourism boom starting in 2010. Tourism accounted for more than 10% of Iceland's GDP in 2017.^[17] After a period of robust growth, Iceland's economy is slowing down according to an economic outlook for the years 2018–2020 published by Arion Research in April 2018.^[18]

Iceland has a mixed economy with high levels of free trade and government intervention. However, government consumption is less than other Nordic countries. Hydro-power is the primary source of home and industrial electrical supply in Iceland.^[19]

In the 1990s Iceland undertook extensive free market reforms, which initially produced strong economic growth. As a result, Iceland was rated as having one of the world's highest levels of economic freedom^[20] as well as civil freedoms. In 2007, Iceland topped the list of nations ranked by Human Development Index^[21] and was one of the most egalitarian, according to the calculation provided by the Gini coefficient.^[22]

From 2006 onwards, the economy faced problems of growing inflation and current account deficits. Partly in response, and partly as a result of earlier reforms, the financial system expanded rapidly before collapsing entirely in a sweeping financial crisis. Iceland had to obtain emergency funding from the International Monetary Fund and a range of European countries in November 2008. The economy has since rebounded, beginning in 2010.