Economy of Iceland

Economy of Iceland

Reykjavík
Currency	Icelandic króna (ISK, kr)
Fiscal year	Calendar year
Trade organisations	EFTA, EEA, OECD, WTO
Country group	Developed/Advanced[1] High-income economy[2]
Statistics
Population	387,758 (1 January 2023)[3]
GDP	$28 billion (nominal, 2023)[4] $26 billion (PPP, 2023)[4]
GDP rank	112th (nominal, 2023) 149th (PPP, 2023)
GDP growth	6.4% (2022)[5] 2.3% (2023f)[5] 2.1% (2024f)[5]
GDP per capita	$75,180 (nominal, 2023)[4] $69,779 (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.)[6]
Inflation (CPI)	9.8% (March 2023)[7]
Population below poverty line	8% – income below 1,200€/ month (2015)[8] 12.8% at risk of poverty or social exclusion (AROPE, 2017)[9]
Gini coefficient	25.2 low (2017, Eurostat)[10]
Human Development Index	0.959 very high (2021)[11] (3rd) 0.915 very high IHDI (1st) (2021)[12]
Labour force	222,391 (2021)[13] 86.5% employment rate (2018)[14]
Labour force by occupation	agriculture: 4.8% industry: 22.2% services: 73% (2008)[6]
Unemployment	5.1% (February 2023)[15] 9.9% youth unemployment (15 to 24 year-olds; July 2020)[16]
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)[6]
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)[6]
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)[6]
FDI stock	$6.666 billion (31 December 2017 est.)[6] Abroad: $11.24 billion (31 December 2017 est.)[6]
Current account	$857 million (2017 est.)[6]
Gross external debt	$21.7 billion (31 December 2017 est.)[6]
Public finances
Government debt	40% of GDP (2017 est.)[6]
Budget balance	+1.5% (of GDP) (2017 est.)[6]
Revenues	10.39 billion (2017 est.)[6]
Expenses	10.02 billion (2017 est.)[6]
Economic aid	c. $40 million (0.24% GDP, 2015 budget)
Credit rating	Moody's Investors Service[17] A-2 (Foreign) A-2 (Domestic) Outlook: Stable Standard & Poor's[17] A (Foreign) A (Domestic) Outlook: Stable Fitch[17] A (Foreign) A (Domestic) Outlook: Stable
Foreign reserves	$6.567 billion (31 December 2017 est.)[6]
Main data source: CIA World Fact Book 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.^[18] 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.^[19] 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.^[20]

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.^[21]

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^[22] as well as civil freedoms. In 2007, Iceland topped the list of nations ranked by Human Development Index^[23] and was one of the most egalitarian, according to the calculation provided by the Gini coefficient.^[24]

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.