Editing Economy of Iceland

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{{Infobox economy
| country = Iceland
| image = File:Vista de Reikiavik desde Perlan, Distrito de la Capital, Islandia, 2014-08-13, DD 118-120 HDR.JPG
| caption = [[Reykjavík]]
| currency = [[Icelandic króna]] (ISK, kr)
| fixed exchange = <!-- Does not apply. -->
| year = Calendar year
| organs = [[European Free Trade Association|EFTA]], [[European Economic Area|EEA]], [[Organisation for Economic Co-operation and Development|OECD]], [[World Trade Organization|WTO]]
| group = {{plainlist|
*[[Developed country|Advanced economy]]<ref>{{Cite web |url=https://www.imf.org/en/Publications/WEO/weo-database/2024/April/groups-and-aggregates |title=Groups and Aggregates Information |publisher=[[International Monetary Fund]] |website=IMF.org}}</ref>
*[[World Bank high-income economy|High-income economy]]<ref>{{Cite web |url=https://datahelpdesk.worldbank.org/knowledgebase/articles/906519-world-bank-country-and-lending-groups |title=World Bank Country and Lending Groups |publisher=[[World Bank]] |website=datahelpdesk.worldbank.org |access-date=29 September 2019}}</ref>}}
| population = {{Increase}} 400,000 (2024)<ref>{{Cite web |url=https://www.statice.is/publications/news-archive/inhabitants/the-population-on-january-1st-2022/|title=Statistics Iceland: The population increased by 2.0% in 2021 }}</ref>
| gdp = {{plainlist|
*{{Increase}} $35.38 billion (nominal, 2025)<ref name="IMFWEOIS">{{cite web |url=https://www.imf.org/en/Publications/WEO/weo-database/2024/October/weo-report?c=176,&s=NGDP_R,NGDP_RPCH,NGDP,NGDPD,PPPGDP,NGDP_D,NGDPRPC,NGDPRPPPPC,NGDPPC,NGDPDPC,PPPPC,PPPSH,PPPEX,NID_NGDP,NGSD_NGDP,PCPI,PCPIPCH,PCPIE,PCPIEPCH,TM_RPCH,TMG_RPCH,TX_RPCH,TXG_RPCH,LUR,LE,LP,GGR,GGR_NGDP,GGX,GGX_NGDP,GGXCNL,GGXCNL_NGDP,GGSB,GGSB_NPGDP,GGXONLB,GGXONLB_NGDP,GGXWDN,GGXWDN_NGDP,GGXWDG,GGXWDG_NGDP,NGDP_FY,BCA,BCA_NGDPD,&sy=2025&ey=2025&ssm=0&scsm=1&scc=0&ssd=1&ssc=0&sic=0&sort=country&ds=.&br=1 |title=Report for Selected Countries and Subjects: April 2024|publisher=[[International Monetary Fund]]|website=imf.org}}</ref>
*{{Increase}} $31.53 billion ([[Purchasing power parity|PPP]], 2025)<ref name="IMFWEOIS"/>}}
| gdp rank = {{plainlist|
*[[List of countries by GDP (nominal)|112th (nominal, 2023)]]
*[[List of countries by GDP (PPP)|149th (PPP, 2023)]]}}
| growth = {{plainlist| 
*4.1%&nbsp;(2023)
*1.7%&nbsp;(2024)
*2.0%&nbsp;(2025)<ref name="IMFWEOIS"/>
}}
| per capita = {{plainlist|
*{{Increase}} $90,110 (nominal, 2025)<ref name="IMFWEOIS"/>
*{{Increase}} $80,320 (PPP, 2025)<ref name="IMFWEOIS"/>}}
| per capita rank = {{plainlist|
*[[List of countries by GDP (nominal) per capita|8th (nominal, 2023)]]
*[[List of countries by GDP (PPP) per capita|14th (PPP, 2023)]]}}
| cpi = {{decrease}} 72 out of 100 points (2023)<ref name="ti_2023">{{cite web |url=https://www.transparency.org/en/cpi/2023 |date=30 January 2024 |title=Corruption Perceptions Index |website=[[Transparency International]] |access-date=15 July 2024 |archive-date=30 January 2024 |archive-url=https://web.archive.org/web/20240130062042/https://www.transparency.org/en/cpi/2023 |url-status=live }}</ref> ([[Corruption Perceptions Index#Ranking over Time|19th]])
| sectors = {{plainlist|
*[[Primary sector of the economy|manufacturing]]: 10.7%
*[[Secondary sector of the economy|real estate]]: 10.4%
*[[Tertiary sector of the economy|wholesale]]: 9.0%
*(2023 est.)<ref name="Statistics Iceland">{{Cite web |url=https://statice.is/statistics/economy/national-accounts/production-approach/ |title=Production approach
 |publisher=Statistics Iceland |website=statice.is |access-date=27 February 2025}}</ref>}}
| components = 
| inflation = {{DecreasePositive}} 8.74% (2023 est.)<ref>{{Cite web |title=Consumer price index |url=https://www.statice.is/?PageID=1260&src=/temp_en/Dialog/varval.asp?ma=UTA01202%26ti=Export+and+imports+by+months+1988-2011%26path=../Database/utanrikisverslun/Voruskipti/%26lang=1%26units=Fob%20and%20CIF%20million%20ISK |website=[[Statistics Iceland]] |access-date=1 April 2023}}</ref>
| bankrate = 
| poverty = {{plainlist|
*{{DecreasePositive}} 4.9% &ndash; income below 1,200€/ month (2021)<ref name="Iceland Has Lowest Poverty Rate Among OECD Countries">[https://icelandmonitor.mbl.is/news/politics_and_society/2021/10/19/iceland_has_lowest_poverty_rate_among_oecd_countrie/], Retrieved 4 August 2015</ref>
*{{DecreasePositive}} 9.0% at risk of poverty or social exclusion (2023)<ref>{{Cite web |title=At-risk-of-poverty rate 9.0% in 2023
 |url=https://www.statice.is/publications/news-archive/quality-of-life/at-risk-of-poverty-rate-2023/#:~:text=In%202023%2C%20the%20at%2Drisk,national%20median%20equivalised%20disposable%20income. |website=ec.europa.eu/eurostat |publisher=Statistics Iceland}}</ref>}}
| gini = {{IncreaseNegative}} 70.3 (2021)<ref>{{Cite web |url=https://www.worldeconomics.com/Inequality/Gini-Coefficient/Iceland.aspxn |title=Iceland's Gini Coefficient|publisher=World Economics |website=worldeconomics.com}}</ref>
| hdi = {{plainlist|
*{{Increase}} 0.959 {{color|darkgreen|very high}} (2022)<ref name="hdi">{{Cite web |url=https://hdr.undp.org/data-center/specific-country-data#/countries/ISL |title=Human Development Index (HDI) |publisher=[[Human Development Report|HDRO (Human Development Report Office)]] [[United Nations Development Programme]] |website=hdr.undp.org}}</ref> ([[List of countries by Human Development Index|3rd]])
*{{Increase}} 0.910 {{color|darkgreen|very high}} [[List of countries by inequality-adjusted HDI|IHDI (1st)]] (2022)<ref name="hdi"/>}}
| labor = {{plainlist|
*{{Increase}} 240,000 (2023 est.)
*{{increase}} 85.3% employment rate (2023) <ref name="Statistics Iceland"/> |}}
| occupations = {{plainlist|
*[[Primary sector of the economy|agriculture]]: 3.8%
*[[Secondary sector of the economy|industry]]: 21.1%
*[[Tertiary sector of the economy|services]]: 64.4%
*(2023 est.) <ref name="Statistics Iceland"/> }}
| unemployment = {{plainlist|
*{{DecreasePositive}} 3.56% (2023 est.)<ref>{{Cite web |url=https://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=une_rt_m&lang=en |title=Unemployment by sex and age - monthly average |publisher=[[Eurostat]] |website=appsso.eurostat.ec.europa.eu |access-date=4 October 2020}}</ref>
*{{DecreasePositive}} 9.6% youth unemployment (15 to 24 year-olds; July 2020)}}
| average gross salary = 804,000 ISK / [[Eur|€]]5,500 month (2023) <ref>{{Cite web |url=https://hagstofa.is/utgafur/frettasafn/laun-og-tekjur/laun-2023/ |title=Avarage salaty in Iceland |publisher=[[Statistics Iceland]] |website=statice.is |access-date=11 January 2025}}</ref>
| gross median = 
| average net salary = 578,000 ISK / [[Eur|€]]4,000 month (2023)
| net median = 
| industries = tourism, fish processing; aluminum smelting; geothermal power, hydropower; medical/pharmaceutical products
| edbr = {{Decrease}} [[Ease of doing business#Ranking|26th (very easy, 2020)]]<ref name="Ease of doing business ranking">{{Cite web |url=http://www.doingbusiness.org/data/exploreeconomies/iceland |title=Ease of Doing Business in Iceland |publisher=Doingbusiness.org |access-date=24 November 2017 }}</ref>
| exports = {{Decrease}} $7.31 billion (2023 est)<ref name="OEC"/>
| export-goods = raw aluminium, fish fillets, non-fillet frozen fish, and orthopedic appliances (2023)
| export-partners = {{plainlist|
*{{Flag|Netherlands}} $1.97B
*{{Flag|Germany}} $771M
*{{Flag|United States}} $735M
*{{Flag|United Kingdom}} $607M
*{{Flag|Norway}} $444M
*(2023)<ref name="OEC"/>}}
| imports = {{Decrease}} $9.85 billion (2023 est.)
| import-goods = refined petroleum, cars, carbon-based electronics, aluminium oxide, and computers (2023)
| import-partners = {{plainlist|
*{{Flag|Norway}} $1.11B
*{{Flag|China}} $908M
*{{Flag|Germany}} $903M
*{{Flag|Netherlands}} $745M
*{{Flag|United States}} $694M
*(2023)<ref name="OEC"/>}}
| FDI = {{plainlist|
*{{Decrease}} $8.3 billion (2023 est.)<ref name="Lloyd's Bank"/>
*{{Decrease}} Abroad: $5.23 billion (2023 est.)<ref name="Central Bank of Iceland"/>}}
| current account = {{Increase}} $385 million (2023 est.)<ref name="CIAWFIC">{{Cite web |url=https://www.cia.gov/the-world-factbook/countries/iceland/ |title=The World Factbook |publisher=[[Central Intelligence Agency]] |website=CIA.gov |access-date=4 December 2019}}</ref>
| gross external debt = {{DecreasePositive}} $25.3 billion (September 2024 est.)<ref name="CIAWFIC"/>
| NIIP = 
| debt = {{IncreaseNegative}} 95.9% of GDP (2023 est.)<ref name="Central Bank of Iceland"/>
| balance = 0.6% (of GDP) (2023 est.)<ref name="Central Bank of Iceland"/>
| revenue = 274 billion kr (2022 est.)<ref name="Statistics Iceland"/>
| expenses = 1,930.7 billion kr (2023 est.)<ref name="Statistics Iceland"/>
| aid = c. $71.9 million (0.35% GDP, 2022 budget)
| credit = '''Moody's Investors Service'''<ref name="Ministry of Finance and Economic Affairs">[https://www.stjornarradid.is/verkefni/efnahagsmal-og-opinber-fjarmal/lansfjarmal-rikissjods/ Iceland Ministry of Finance and Economic Affairs], Retrieved 22 September 2022</ref>{{plainlist|style=margin-bottom:0.5em|
*A-2 (Foreign)
*A-2 (Domestic)
*Outlook: Stable}}
'''Standard & Poor's'''<ref name="Ministry of Finance and Economic Affairs"/>{{plainlist|style=margin-bottom:0.5em|
*A (Foreign)
*A (Domestic)
*Outlook: Stable}}
'''Fitch'''<ref name="Ministry of Finance and Economic Affairs"/>{{plainlist|
*A (Foreign)
*A (Domestic)
*Outlook: Stable}}
| reserves = {{Increase}} 902.4 billion kr (2025 est.)<ref name="Central Bank of Iceland"/>
| cianame = iceland
| usebelowbox = yes
| presentUS$asdefault = yes
| Surplus = $0.7 billion kr (2024)
}}
The '''economy of Iceland''' is small and subject to high volatility. In 2011, [[gross domestic product]] was [[United States dollar|US$]]12 billion, but by 2018 it had increased to a nominal GDP of [[United States dollar|US$]]27 billion. With a population of 387,000, this is $55,000 [[per capita]], based on [[purchasing power parity]] (PPP) estimates.<ref name="statice">Source: Statistics Iceland.</ref> The [[2008–2011 Icelandic financial crisis]] produced a decline in GDP and employment, which 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.<ref name="Tourism" /> After a period of robust growth, Iceland's economy slowed down according to an economic outlook for the years 2018–2020 published by Arion Research in April of 2018.<ref name=":0">{{Cite web|url=https://www.arionbanki.is/english/markets/investment-banking/research/research-all-news/2018/04/23/Economic-Outlook-Caution-fragile/|title=Economic Outlook: Caution, fragile!|website=Research - all news - Arionbanki|language=en|access-date=2018-05-14|archive-date=2018-05-15|archive-url=https://web.archive.org/web/20180515043725/https://www.arionbanki.is/english/markets/investment-banking/research/research-all-news/2018/04/23/Economic-Outlook-Caution-fragile/|url-status=dead}}</ref>

[[Iceland]] has a [[mixed economy]] with high levels of [[free trade]] and government intervention. However, government consumption is less than other [[Nordic countries]]. [[Renewable energy in Iceland|Hydro-power]] is the primary source of home and industrial electrical supply in Iceland.<ref>{{Cite web|url=http://www.scientificamerican.com/article.cfm?id=iceland-geothermal-power|title=One Hot Island: Iceland's Renewable Geothermal Power|author=Christopher Mims|website=[[Scientific American]] |access-date=3 March 2015}}</ref>

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]]<ref>[http://www.invest.is/news/30/default.aspx Iceland: One of the world´s most free economies] {{webarchive|url=https://web.archive.org/web/20080913221218/http://www.invest.is/news/30/default.aspx |date=2008-09-13 }}, Invest in Iceland Agency</ref> as well as civil freedoms. In 2007, Iceland topped the list of nations ranked by [[Human Development Index]]<ref>[http://hdr.undp.org/en/media/hdr_20072008_en_indicator_tables.pdf Human Development Index] {{webarchive |url=https://web.archive.org/web/20150702193103/http://hdr.undp.org/en/media/hdr_20072008_en_indicator_tables.pdf |date=July 2, 2015 }}</ref> and was one of the most [[egalitarianism|egalitarian]], according to the calculation provided by the [[List of countries by income equality|Gini coefficient]].<ref>{{Cite web |url=http://hdrstats.undp.org/indicators/145.html |title=Human Development Report 2007/2008 - Inequality measures, ratio of richest 10% to poorest 10% |publisher=Hdrstats.undp.org |date=2010-11-04 |access-date=2012-02-20 |archive-url=https://web.archive.org/web/20090212141428/http://hdrstats.undp.org/indicators/145.html |archive-date=2009-02-12 }}</ref>

From 2006 onwards, the economy faced problems of growing [[inflation]] and [[current account deficit]]s. Partly in response, and partly as a result of earlier reforms, the financial system expanded rapidly before collapsing entirely in the [[2008–2011 Icelandic 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 since 2010,<ref>"Hagstofa Íslands. Helstu hagstærðir hins opinbera 1980–2014" (in Icelandic). Statistics Iceland. Retrieved 25 May 2015.</ref> and continues to grow to this day.
[[File:Iceland bonds.webp|thumb|upright=1.0|right|Iceland bonds had an [[Inverted yield curve]] in 2008
{{legend-line|#02529C solid 3px|10 year bonds}}
{{legend-line|#DC1E35 solid 3px|5 year bonds}}
{{legend-line|#929292 solid 3px|2 year bonds}}
]]

==History==
{{Main|Economic history of Iceland}}In [[History of Iceland#Settlement (874–930)|medieval Iceland]], trade was traditionally conducted through barter.<ref>Mehler, Natascha; Gardiner, Mark (2021), ''Coinless exchange and foreign merchants in medieval Iceland (AD 900-1600)'', Hamburg: Wachhotz Verlag, pp. 35–54, {{Doi|10.23797/9783529035418}}, {{hdl|1887/3196654}}, {{ISBN|978-3-529-03541-8}}, {{s2cid|243630241}}</ref> The traditional nationalistic historical narrative says that Iceland had experienced a golden age from 874 until the 11th century, when the country [[History of Iceland#Iceland under Norwegian and Danish kings (1262–1944)|came under foreign rule]] and "suffered humiliation" as its economy declined.<ref>Bergmann, Eiríkur (1 March 2014). "Iceland: A postimperial sovereignty project". ''Cooperation and Conflict''. '''49''' (1): 33–54. {{doi|10.1177/0010836713514152}}. {{ISSN|0010-8367}}. {{s2cid|154972672}}.</ref> There is very little evidence to support this narrative.<ref>Kjartansson, Helgi Skúli (18 November 2019). "Axel Kristinsson, Hnignun, hvaða hnignun? Goðsögnin um niðurlægingartímabilið í sögu Íslands [Decline, What Decline? The Myth of the Depressed Era in the History of Iceland]. (Reykjavík: Sögufélag 2018). 280 pp". ''1700-tal''. '''16''': 149–151–149–151. {{doi|10.7557/4.4890}}. {{ISSN|2001-9866}}.</ref><ref>Kristinsson, Axel (2018). ''Hnignun, hvaða hnignun? Goðsögnin um niðurlægingartímabilið í sögu Íslands''. (in Icelandic) Sögufélag.</ref>

Iceland had among the lowest [[Gross domestic product|GDP per capita]] out of all the [[Western-European countries|Western European countries]] at the start of the 20th century.<ref>Jónsson, Guðmundur (1999). ''Hagvöxtur og iðnvæðing. Þjóðarframleiðsla á Íslandi 1870–1945''.</ref> An assessment by economists at the Central Bank of Iceland stated that the country's "post-World War II economic growth has been both significantly higher and more volatile than in other [[OECD]] countries", and that "the Icelandic business cycle has been largely independent of the business cycle in other industrialised countries."<ref>https://www.sedlabanki.is/lisalib/getfile.aspx?itemid=6371</ref> Iceland has had a total of twenty financial crashes since 1875, according to [[Reuters]].<ref>Jones, Maiya Keidan and Marc. "Red hot Iceland keeps some investors out in the cold". ''Reuters UK''. Archived from the original on 28 June 2017. Retrieved 5 July 2017.</ref>

Fishing became a large part of the Icelandic economy after the 1880s, partly due to expanded fishing with sailing [[Smack (ship)|smacks]].<ref>JÓnsson, SigfÚs (1 July 1983). "The Icelandic fisheries in the pre-mechanization Era, C. 1800–1905: Spatial and economic implications of growth". ''Scandinavian Economic History Review''. '''31''' (2): 132–150. {{doi|10.1080/03585522.1983.10408006}}. {{ISSN|0358-5522}}.</ref> During the [[World War II|Second World War]], the UK imposed trade sanctions on Iceland to prevent them from trading with [[Nazi Germany|Germany]]. After the [[Invasion of Iceland|British]] and later [[Allied occupation of Iceland|American occupations of the island]], the economy was boosted by a substantial amount, and Iceland went from one of the poorest countries in Europe to one of the wealthiest.<ref>Steinsson, Sverrir (2018). "A Theory of Shelter: Iceland's American Period (1941–2006)". ''Scandinavian Journal of History''. '''43''' (4): 539–563. {{doi|10.1080/03468755.2018.1467078}}. {{s2cid|150053547}}.</ref> This was furthered by Iceland being included as part of the post-WWII [[Marshall Plan]], receiving the largest amount per capita between 1948 and 1951, almost double the amount of the next highest recipient.<ref>Guðmundur Jonsson, Sigurður Snævarr (2008). "Iceland's Response to European Economic Integration". ''Pathbreakers: Small European Countries Responding to Globalisation and Deglobalisation''. Peter Lang. p. 385.</ref>

Towards the end of the 20th century, Iceland's economy continued to grow. A coalition between the [[Independence Party (Iceland)|Independence]] and [[Progressive Party (Iceland)|Progressive parties]] led to the privatization of state-owned banks and telecommunications. Corporate income tax was reduced to 18%, inheritance tax was greatly reduced, and the net wealth tax was completely abolished. The term "Nordic Tiger" became heavily used refer to the period of economic prosperity in Iceland that began in the 1990s.<ref>Global freeze kills Nordic tiger Archived 5 November 2009 at the [[Wayback Machine]], ''[[The Age]]'', 11 October 2008.</ref>

{{See also|2008–2011 Icelandic financial crisis}}

The "Nordic Tiger" period came to a sudden end as a result of the [[2008 financial crisis]]. Iceland went from being the 10th richest country in the world in 2007 to the 21st in 2010.<ref>Sigríður Benediktsdóttir, Gauti B. Eggertsson, Eggert Þórarinsson (November 2017). "The Rise, the Fall, and the Resurrection of Iceland". ''NBER Working Paper No. 24005''. {{doi|10.3386/w24005}}</ref> Banks made risky loans and manipulated markets, with the country's regulators understaffed and not properly supervising them. The [[Icelandic króna]] underwent sharp inflation, with the three largest banks in the country being placed under government control. Iceland's central bank raised its interest rate to 18% in an attempt to combat the inflation.<ref>Benediktsdottir, Sigridur; Danielsson, Jon; Zoega, Gylfi (1 April 2011). "Lessons from a collapse of a financial system". ''Economic Policy''. '''26''' (66): 183–235. {{CiteSeerX|10.1.1.185.4714}}.{{doi|10.1111/j.1468-0327.2011.00260.x}}. {{ISSN|0266-4658}}. {{s2cid|153628546}}.</ref><ref>Iceland's interest rate soars to 18% Archived 24 January 2009 at the [[Wayback Machine]], ITN News, 8 October 2008.</ref>

With help from the [[International Monetary Fund]] (IMF), Iceland's economy stabilized and managed to pay off all of its loans by the end of 2015. Economists Ásgeir Jónsson and Hersir Sigurjónsson said that "Iceland was treated differently from developing countries and former IMF clients. There was no call for Iceland to adopt sharp austerity measures at the inception of the joint economic plan. Instead, the government would be allowed to maintain large public deficits in the first year – 2009 – allowing fiscal multipliers to counteract the output contraction that was underway. Iceland also was not asked to downsize its Scandinavian-type welfare system."<ref>Jónsson, Ásgeir; Sigurgeirsson, Hersir (2016). ''The Icelandic Financial Crisis - A Study into the World´s Smallest Currency Area and its Recovery from Total Banking Collapse''. Palgrave. p. 146. {{doi|10.1057/978-1-137-39455-2}}. {{ISBN|978-1-137-39454-5}}</ref>

==Geography and resources==
Iceland occupies a land area of 103,000 square kilometers. It has a 4,790 kilometer coastline and a 200 nautical mile (370.4&nbsp;km) exclusive economic zone extending over 758,000 square kilometers of water. Approximately only 0.7% of Iceland's surface area is [[Arable land|arable]], since the island's terrain is mostly mountainous and volcanic.<ref>{{Cite web | url=http://www.sedlabanki.is/lisalib/getfile.aspx?itemid=3363 | title=The Economy of Iceland | publisher=The Central Bank of Iceland | access-date=2006-06-22 | archive-date=2015-09-24 | archive-url=https://web.archive.org/web/20150924100245/http://www.sedlabanki.is/lisalib/getfile.aspx?itemid=3363 }}</ref>

Iceland has few proven [[mineral]] resources. In the past, deposits of [[sulphur]] have been mined, and [[diatomite]] (skeletal algae) was extracted from Lake [[Mývatn]] until recently. However, today most sulphur is obtained in the refining of oil. The diatomite plant has closed for environmental reasons. The only natural resource conversion in Iceland is the manufacture of [[cement]]. [[Concrete]] is widely used as building material, including for all types of residential housing.

By harnessing the abundant [[hydroelectric]] and [[Geothermal power|geothermal]] power sources, [[renewable energy in Iceland|Iceland's renewable energy industry]] provides close to 85% of all the nation's [[primary energy]]<ref name="Icelandic Energy Portal">{{Cite web|url=http://askjaenergy.org/iceland-introduction/energy-data/|title=Energy Data|work=Askja Energy - The Independent Icelandic Energy Portal|date=3 May 2012 |access-date=3 March 2015}}</ref> &ndash; proportionally more than any other country<ref>[http://www.iphe.net/IPHE%20Paris/Thursday%20Presentations/Iceland.pdf Presentation to the International Partnership for the Hydrogen Economy] {{webarchive|url=https://web.archive.org/web/20070627163008/http://www.iphe.net/IPHE%20Paris/Thursday%20Presentations/Iceland.pdf |date=2007-06-27 }}, ''Icelandic Ministry of Industry and Commerce & Ministry for Foreign Affairs'', published January 2005, accessed 2007-05-14</ref> &ndash; with 99.9% of Iceland's [[electricity]] being generated from renewables.

By far the largest of the many [[Icelandic hydroelectric power stations]] is [[Kárahnjúkar Hydropower Plant]] (690&nbsp;MW) in the area north of [[Vatnajökull]]. Other stations include Búrfell (270&nbsp;MW), Hrauneyjarfoss (210&nbsp;MW), Sigalda (150&nbsp;MW), Blanda (150&nbsp;MW), and more. Iceland has explored the feasibility of exporting hydroelectric energy via submarine cable to mainland Europe and also actively seeks to expand its power-intensive industries, including [[aluminium]] and [[ferro-silicon]] smelting plants.<ref>[https://askjaenergy.com/iceland-renewable-energy-sources/icelandic-power-plants/ "Power Plants".] November 10, 2011.</ref>

==Sectors==
In 2017 the proportion of Iceland's exports was: tourism 42%, seafood 17%, aluminium 16%, other 24%.<ref name="Tourism">{{Cite web |title=Tourism in Iceland: Here to stay? |url=https://www.arionbanki.is/library/skrar/Netpostur/Greiningardeild/Tenglar/Tourism%20in%20Iceland%20-%20Here%20to%20stay.pdf |access-date=2018-05-14 |website=Research - all news - Arionbanki |language=en}}</ref>

===Tourism===
{{Main|Tourism in Iceland}}
Tourism is Iceland's largest export sector by far. Tourism accounted for more than 33% of the country's GDP in 2019.<ref name="Tourism"/> Iceland is one of the most tourism-dependent countries on Earth.<ref>{{Cite news|url=http://icelandmag.is/article/iceland-one-five-countries-world-most-dependent-tourism|title=Iceland one of five countries in the world most dependent on tourism|work=Icelandmag|access-date=2018-08-14|language=en}}</ref> In October 2017 the tourism sector directly employed around 26,800 people, with the total number of employees in the country being 186,900.<ref>{{Cite web|url=http://statice.is/publications/news-archive/enterprises/number-of-employers-and-employees-in-october-2017-1/|title=Number of employers and employees in October 2017 (1)|website=Hagstofa|access-date=2018-05-14}}</ref>

At the start of the growth period around 2010, tourism benefited from a weak ISK, but a strong ISK then cooled down the sector.<ref>[https://www.statice.is/publications/news-archive/enterprises/number-of-employers-and-employees-in-february-2018/ Slower growth in tourism] - Statistics Iceland</ref> From 2010 to 2018, tourist arrivals in Iceland increased by 378%.<ref name=":0" />

===Manufacturing===
Iceland is the world's largest electricity producer per capita.<ref name="Icelandic Energy Portal"/> The presence of abundant electrical power due to Iceland's geothermal and hydroelectric energy sources has led to the growth of the manufacturing sector. Power-intensive industries, which are the largest components of the manufacturing sector, produce mainly for export. Manufactured products constituted 36% of all merchandise exports, an increase from the 1997 figure of 22%. Power-intensive products' share of merchandise exports is 21%, compared to 12% in 1997.<ref>{{Cite web | url=http://www.sedlabanki.is/lisalib/getfile.aspx?itemid=3363 | title=Economy of Iceland | publisher=Central Bank of Iceland | page=23 | access-date=2006-06-22 | archive-date=2015-09-24 | archive-url=https://web.archive.org/web/20150924100245/http://www.sedlabanki.is/lisalib/getfile.aspx?itemid=3363 }}</ref>

====Aluminium====
[[Aluminium smelting]] is the most important power-intensive industry in Iceland. There are currently three plants in operation with a total capacity of over 850,000 metric tons per year (t/yr) in 2019,<ref>{{Cite web|title=Aluminium overtakes fish in Iceland|url=http://www.nordregio.se/en/Metameny/About-Nordregio/Journal-of-Nordregio/Journal-of-Nordregio-no-2-2011/Aluminium-overtakes-fish-in-Iceland/|archive-url=https://web.archive.org/web/20170330195258/http://www.nordregio.se/en/Metameny/About-Nordregio/Journal-of-Nordregio/Journal-of-Nordregio-no-2-2011/Aluminium-overtakes-fish-in-Iceland/|archive-date=30 March 2017|publisher=Nordregio|access-date=16 October 2013}}</ref> putting Iceland at [[List of countries by aluminium production|12th place]] among aluminium-producing nations worldwide as of 2023.<ref>[https://pubs.usgs.gov/periodicals/mcs2024/mcs2024-aluminum.pdf "USGS Minerals Information: Mineral Commodity Summaries"] (PDF). ''minerals.usgs.gov''. Retrieved 2025-01-14</ref>

[[Rio Tinto Alcan]] operates Iceland's first aluminium smelter (plant name: ISAL), in [[Straumsvík]], near the town of [[Hafnarfjörður]]. The plant has been in operation since 1969. Its initial capacity was 33,000 [[metric tons]] (t) per year, but it has since been expanded several times and now has a capacity of about 189,000 t/yr.<ref>Háskólabókasafn, Landsbókasafn Íslands -. [https://timarit.is/page/3186225 "Timarit.is"]. ''timarit.is'' (in Icelandic). Retrieved 31 May 2024.</ref>

The second plant started production in 1998 and is operated by Norðurál, a wholly owned subsidiary of U.S.-based [[Century Aluminum]] Company. It is located in [[Grundartangi]] in Western Iceland near the town of [[Akranes]]. Its former capacity was 220,000 t/yr but an expansion to 260,000 t/yr has already finished. In 2012, the plant produced 280,000 metric tons which was valued at 610 million dollars or 76 billion krónur. 4,300 gigawatts hours were used in the production that year, amounting to nearly one-fourth of all electrical energy produced in the country.<ref>{{Cite web | url=http://nordural.is/default.asp?sid_id=1878&tre_rod=001%7c001%7c006%7c&tId=2&fre_id=31134&meira=1 | title=Viðbótarstækkun Norðuráls flýtt | date=April 3, 2006 | publisher=Norðurál | access-date = 2006-06-22 |archive-url = https://web.archive.org/web/20060505160737/http://nordural.is/default.asp?sid_id=1878&tre_rod=001 <!-- Bot retrieved archive --> |archive-date = 2006-05-05}}</ref> In October 2013, Norðurál announced the start of a five-year project aimed at increasing its production by a further 50,000 t/yr.<ref>{{Cite web|title=Norðurál semur við VHE|trans-title=Nordurál signs contract with VHE|url=http://nordural.is/islenska/fyrirtaekid/frettir/nr/180923/|publisher=Norðurál ehf.|access-date=23 October 2013|language=is|date=15 October 2013|archive-url=https://web.archive.org/web/20131029192434/http://nordural.is/islenska/fyrirtaekid/frettir/nr/180923/|archive-date=29 October 2013|df=dmy-all}}</ref>

United States–based aluminium manufacturer [[Alcoa]] runs a plant near the town of [[Reyðarfjörður]]. The plant, known as ''Fjardaál'' (or "aluminium of the [[fjord]]s"), has a capacity of 346,000 t/yr and was put into operation in April 2008. To power the plant, [[Landsvirkjun]] built [[Kárahnjúkar Hydropower Plant|Kárahnjúkar]], a 690-[[megawatt|MW]]<ref>{{Cite web|title=Fljótsdalur Power Station|url=http://www.landsvirkjun.com/Company/PowerStations/FljotsdalurPowerStation/|publisher=Landvirkjun|access-date=16 October 2013|archive-date=20 May 2017|archive-url=https://web.archive.org/web/20170520181627/http://www.landsvirkjun.com/Company/PowerStations/FljotsdalurPowerStation}}</ref> hydropower station. The project was enormous in the context of the Icelandic economy, increasing total installed electric power capacity from under 1,600 MW to around 2,300 MW.<ref>{{Cite web|title=Virkjanasaga frá 1930 til 2012|trans-title=Historic development of installed power between 1930 and 2012|url=http://www.orkustofnun.is/yfirflokkur/raforkutolfraedi/virkjanasaga|publisher=National Energy Authority (Orkustofnun), Iceland|access-date=16 October 2013|archive-date=13 September 2016|archive-url=https://web.archive.org/web/20160913183232/http://www.orkustofnun.is/yfirflokkur/raforkutolfraedi/virkjanasaga|url-status=dead}}</ref>
[[File:Alcoa Reydarfjördur.JPG|thumb|Alcoa's aluminium plant in Reyðarfjörður, Iceland]]
According to Alcoa, construction of Fjardaál entailed no human displacement, no impact on [[endangered species]], and no danger to commercial fisheries; there will also be no significant effect on reindeer, bird and seal populations.<ref>{{Cite web | url=http://www.alcoa.com/iceland/en/alcoa_iceland/fjardaal_background.asp | title=Fjarðaál Overview | publisher=Alcoa Aluminum | access-date = 2006-06-22}}</ref> However, the project drew considerable opposition from environmentalist groups such as the [[World Wide Fund for Nature]], which called on Alcoa to abandon the plan to build Fjardaál. In addition, Icelandic singer [[Björk]] was a notable early opponent to the plan; protesting the proposed construction, the singer's mother, Hildur Rúna Hauksdóttir, went on a [[hunger strike]] in 2002.<ref>{{Cite news | url=http://news.bbc.co.uk/2/hi/entertainment/2336349.stm | title=Bjork's mother on hunger strike | date=October 17, 2002 | work=BBC News | access-date = 2006-06-22}}</ref>

Several other aluminium smelter projects have been planned. Between 2005 and 2011, Alcoa conducted a feasibility study for a second plant in Iceland near [[Húsavík]].<ref>{{Cite web | url=http://www.alcoa.com/iceland/en/news/whats_new/2006/2006_05_mou.asp | title=Alcoa, Government of Iceland and Municipality of Húsavík Sign Memorandum of Understanding | date=May 17, 2006 | publisher=Alcoa | access-date = 2006-06-22}}</ref> That plant was to have a 250,000 t/yr capacity, to be powered entirely by [[geothermal power]], although later estimates showed a potential need for other sources of power. In October 2011, Alcoa announced its decision to cancel the Bakki project.<ref>{{Cite web|title=Alcoa hættir við Bakka|trans-title=Alcoa cancels Bakki|url=http://www.mbl.is/frettir/innlent/2011/10/17/alcoa_haettir_vid_bakka/|access-date=16 October 2013|language=is|date=17 October 2011}}</ref> In 2006, Nordurál signed a memorandum of understanding with two Icelandic geothermal power producers, [[Hitaveita Suðurnesja]] and [[Orkuveita Reykjavíkur]], to purchase electricity for its own aluminium reduction project in [[Helguvík]]. The power supplied will initially support aluminium production of 150,000 t/yr, which will eventually grow to support 250,000 t/yr.<ref>{{Cite web|url=http://www.nordural.is/Default.asp?Sid_Id=1879&tId=2&Tre_Rod=002&fre_id=33704&meira=1 |title=Century Aluminum Company Icelandic Subsidiary Signs Energy MOU for Helguvik Greenfield Smelter |date=June 2, 2006 |publisher=Nordural |access-date=2006-06-22 |archive-url=https://web.archive.org/web/20071008054440/http://www.nordural.is/Default.asp?Sid_Id=1879&tId=2&Tre_Rod=002&fre_id=33704&meira=1 |archive-date=October 8, 2007 }}</ref>

===Fisheries===
Fisheries and related sectors—in recent years labelled "the ocean cluster"—was the single most important part of the Icelandic economy (it has now been replaced by tourism) representing an overall contribution to GDP of 27.1% in 2011.<ref>{{Cite web|title=Iceland's Ocean Economy—The economic impact and performance of the ocean cluster in 2011|url=https://sjavarklasinn.is/wp-content/uploads/2012/12/IcelandsOceanEconomy2011.pdf&ei=wBVvUuTIONST0AXjzICgDA&usg=AFQjCNEOrZ3wft2YJrKNRcmxlfhaRhfjfA&sig2=_t3ouzpzXUIp8mAtiQpRig |website=Íslenski Sjávarklasinn |trans-website=Iceland Ocean Cluster |access-date=29 October 2013|page=4|language=is|format=PDF}}{{dead link|date=April 2023}}</ref> The fisheries sector directly employs around 9,000 people (4,900 in fishing and 4,100 in fish processing; approximately 5 per cent of Iceland's workforce),<ref>{{Cite web|title=Employed persons by economic activity, sex and regions 2008-2012 (NACE REV 2.)|url=http://statice.is/?PageID=1191&src=https://rannsokn.hagstofa.is/pxen/Dialog/varval.asp?ma=VIN01103%26ti=Employed+persons+by+economic+activity%2C+sex+and+regions+2008%2D2012+%28NACE+REV+2%2E%29++++++%26path=../Database/vinnumarkadur/rannsoknir/%26lang=1%26units=Fj%F6ldi|publisher=Statistics Iceland|access-date=29 October 2013}}</ref> although it is estimated that a total of between 25,000 and 35,000 people (up to 20 per cent of the workforce) depend on the ocean cluster for their livelihood. Many of these jobs are provided by technological companies that manufacture equipment for fisheries firms and by companies engaged in the advanced processing of marine products or in biotechnical production. By contrast, aquaculture remains a very small industry in Iceland, employing only around 250 people for a production of 5,000 tonnes.<ref>{{Cite web|title=Iceland's Ocean Economy—The economic impact and performance of the ocean cluster in 2011|url=https://sjavarklasinn.is/wp-content/uploads/2012/12/IcelandsOceanEconomy2011.pdf&ei=wBVvUuTIONST0AXjzICgDA&usg=AFQjCNEOrZ3wft2YJrKNRcmxlfhaRhfjfA&sig2=_t3ouzpzXUIp8mAtiQpRig |website=Íslenski Sjávarklasinn |trans-website=Iceland Ocean Cluster |access-date=29 October 2013|page=10|language=is|format=PDF}}{{dead link|date=April 2023}}</ref>

Iceland is the second biggest fisheries nation in the North East Atlantic behind [[Norway]], having overtaken the [[United Kingdom]] in the early 1990s. Since 2006, Icelandic fishing waters have yielded a total catch of between 1.1m and 1.4m tonnes of fish annually, although this is down from a peak of over 2m tonnes in 2003.<ref>{{Cite web|title=Iceland's Ocean Economy—The economic impact and performance of the ocean cluster in 2011|url=https://sjavarklasinn.is/wp-content/uploads/2012/12/IcelandsOceanEconomy2011.pdf&ei=wBVvUuTIONST0AXjzICgDA&usg=AFQjCNEOrZ3wft2YJrKNRcmxlfhaRhfjfA&sig2=_t3ouzpzXUIp8mAtiQpRig |website=Íslenski Sjávarklasinn |trans-website=Iceland Ocean Cluster |access-date=29 October 2013|page=5|language=is|format=PDF}}{{dead link|date=April 2023}}</ref>

[[Cod]] remains the most important species harvested by Icelandic fisheries, with a total catch of 178,516 tonnes in 2010. The catch of cod has stagnated in recent years due to quotas, and was supplemented by the catch of [[blue whiting]], which is used mainly for processing. The Icelandic catch of this previously insignificant fish increased from a negligible 369 tonnes in 1995 to a peak of 501,505 tonnes in 2003. Subsequently, the stock showed signs of instability and quotas were reduced, leading to a decline in the catch to 87,121 tonnes in 2010.<ref>{{Cite web|url=http://www.statice.is/?PageID=1214&src=/temp_en/Dialog/varval.asp?ma=SJA09001%26ti=Catch+and+catch+value+by+fishing+area+and+species+1993%2D2010%26path=../Database/sjavarutvegur/af3Fisk/%26lang=1%26units=Tonnes/1,000 |title=Statistics Iceland - Statistics » Fisheries and agriculture » Catch and value of catch |publisher=Statistics Iceland |access-date=2012-02-20}}</ref> There have been increased numbers of [[Atlantic mackerel]] (the "Miracle of the Mackerel") in the 21st century as the Atlantic Ocean has slightly warmed.<ref name=NewYorker41615>{{Cite magazine|author1=Adam Gopnik|title=The Coffee of Civilization in Iceland|url=http://www.newyorker.com/news/daily-comment/the-coffee-of-civilization-in-iceland|access-date=April 16, 2015|magazine=The New Yorker|issue=April 16, 2015|quote=Miracle of the Mackerel. At the beginning of the twenty-first century, schools of mackerel, hugely profitable for the fishing industry, suddenly became abundant in Icelandic fishing waters.}}</ref>

===Finance===
{{See also|2008–2011 Icelandic financial crisis}}

====Banks====
{{Main|List of banks in Iceland}}

The Icelandic banking system has been completely overhauled after the [[2008 financial crisis]]. There are now three major [[commercial bank]]s: [[Landsbankinn]] (National Bank since 2008), [[Arion Bank]] (formerly [[Kaupthing Bank]]) and [[Islandsbanki]] (formerly Glitnir), and [[Kvika Bank|Kvika banki]] (formerly MP Straumur). There are smaller banks and some savings banks, however they are not publicly traded.

There has been extensive consolidation of smaller banks, with [[Sparisjodur Keflavikur]] being taken over by Landsbanki and Byr being taken over by Islandsbanki. Arion Bank, Islandsbanki, and Kvika Banki are the only banks listed on [[Iceland Stock Exchange]]. Arion Bank is mostly owned by foreign creditors while Landsbanki and Islandsbanki are now wholly owned by the State. The ownership stake of the [[Icelandic State]] in the banks is managed by [[Government agencies in Iceland|Bankasysla rikisins]] (State Financial Investments), which aims to privatise its shares in the banks in coming years.{{when|date=September 2024}}

====Stock market====
Because of historically persistent inflation, historical reliance on fish production and the long-standing public ownership of the commercial banks, equity markets were slow to develop. Nasdaq Iceland, formerly the [[Iceland Stock Exchange]] (XICE) was created in 1985. Trading in Icelandic T-Bonds began in 1986 and trading in equities commenced in 1990. All domestic trading in Icelandic [[stock]]s, [[Bond (finance)|bonds]] and [[mutual fund]]s takes place on Nasdaq Iceland.<ref>{{Cite web |date=2025 |title=Nasdaq Iceland |url=https://www.nasdaq.com/solutions/european-markets/iceland |access-date=February 27, 2025 |website=Nasdaq Iceland}}</ref>

Nasdaq Iceland has used electronic trading systems since its creation. Since 2000, [[SAXESS]], the joint trading system of the [[NOREX]] alliance, has been used. There are currently two equities markets on Nasdaq Iceland. The [[ICEX Main|Main]] Market is the larger and better known of the two. The Alternative Market is a less regulated over-the-counter market. Because of the small size of the market, trading is illiquid in comparison with larger markets. A variety of firms across all sectors of the Icelandic economy are listed on Nasdaq Iceland.<ref>{{Cite web |title=Article - The Iceland Stock Exchange |url=https://icelandexport.is/icelandexport2/english/articles/the_iceland_stock_exchange/ |access-date=2025-02-27 |website=icelandexport.is}}</ref>

The most important [[stock market index]] was the [[OMX Iceland 15]]; however, this index was discontinued after the [[2008 financial crisis]] following a decade in which it had been the worst-performing stock market index in the entire world,<ref>{{Cite journal |last=Gudmundsson |first=Már |date=11 May 2011 |title=The Financial Crisis in Iceland: Reflections on causes, consequences and lessons to be learnt |url=https://web.kamihq.com/web/viewer.html?source=extension_redirect&redirect_type=content_type&file=https://sedlabanki.is/lisalib/getfile.aspx?itemid=8715#https://sedlabanki.is/lisalib/getfile.aspx?itemid=8715 |journal=Central Bank of Iceland}}</ref> being "more or less wiped out."<ref>{{Cite news |date=2016-02-10 |title=How did Iceland clean up its banks? |url=https://www.bbc.com/news/business-35485876 |access-date=2025-02-27 |work=BBC News |language=en-GB}}</ref>

====Other financial markets====
Historically, investors tended to be reluctant to hold Icelandic bonds because of the persistence of high inflation and the volatility of the króna. What did exist was largely limited to bonds offered by the central government. The bond market on the ICEX has boomed since the 2010s, however, largely because of the resale of mortgages as housing bonds.{{facts|date=September 2024}}

A [[mutual fund]] market exists on the ICEX in theory, but no funds are currently listed. A small [[derivatives market]] formerly existed, but was closed in 1999 because of illiquidity.{{fact|date=January 2025}}

By the end of 2018, [[Bitcoin mining]] was expected to consume more electricity in Iceland than all the country's residents combined.<ref>[https://arstechnica.com/tech-policy/2018/02/in-iceland-bitcoin-mining-will-soon-use-more-energy-than-its-residents/?amp=1 In Iceland, bitcoin mining will soon use more energy than its residents]</ref>

==Data==
{{update section|date=September 2024}}
[[File:GDP per capita development in Northern Europa.svg|thumb|GDP per capita development in Norway, Iceland, Denmark, Sweden and Finland]]

[[File:Labor union membership by country.webp|thumb|Labor union membership by country]]

[[File:Hours Worked Compared to Earnings Per Week.webp|thumb|Hours Worked Compared to Earnings Per Week]]

The following table shows the main economic indicators in 1980–2017. Inflation under 2% is in green.<ref name=":1">{{Cite web |title=Report for Selected Countries and Subjects |url=https://www.imf.org/en/Publications/WEO/weo-database/2024/October/weo-report?c=176,&s=NGDP_R,NGDP_RPCH,NGDP,NGDPD,PPPGDP,NGDP_D,NGDPRPC,NGDPRPPPPC,NGDPPC,NGDPDPC,PPPPC,PPPSH,PPPEX,NID_NGDP,NGSD_NGDP,PCPI,PCPIPCH,PCPIE,PCPIEPCH,TM_RPCH,TMG_RPCH,TX_RPCH,TXG_RPCH,LUR,LE,LP,GGR,GGR_NGDP,GGX,GGX_NGDP,GGXCNL,GGXCNL_NGDP,GGSB,GGSB_NPGDP,GGXONLB,GGXONLB_NGDP,GGXWDN,GGXWDN_NGDP,GGXWDG,GGXWDG_NGDP,NGDP_FY,BCA,BCA_NGDPD,&sy=2025&ey=2029&ssm=0&scsm=1&scc=0&ssd=1&ssc=0&sic=0&sort=country&ds=.&br=1 |access-date=2025-02-09 |website=www.imf.org |language=en-US}}</ref>
{| class="wikitable" style="text-align:center;"
!Year
!GDP<br /><small>(Bil. US$ PPP)</small>
!GDP per capita<br /><small >(in US$ PPP)</small>
!GDP<br /><small>(Bil. US$<br>nominal)</small>
!GDP growth<br /><small>(real)</small>
!Inflation rate
!Unemployment
!Government debt<br /><small>(% of GDP)</small>
|-
|1980
|2.5
|10,686
|3.4
|{{Increase}}5.7 %
|{{IncreaseNegative}}58.5 %
|0.3 %
|n/a
|-
|1981
|{{Increase}}2.8
|{{Increase}}12,032
|3.5
|{{Increase}}4.3 %
|{{IncreaseNegative}}50.9 %
|0.4 %
|n/a
|-
|1982
|{{Increase}}3.0
|{{Increase}}12,868
|3.3
|{{Increase}}2.2 %
|{{IncreaseNegative}}51.0 %
|{{IncreaseNegative}}0.7 %
|29.1 %
|-
|1983
|{{Increase}}3.1
|{{Increase}}12,931
|2.8
|{{Decrease}}−2.2 %
|{{IncreaseNegative}}84.3 %
|{{IncreaseNegative}}1.0 %
|{{IncreaseNegative}}30.9 %
|-
|1984
|{{Increase}}3.3
|{{Increase}}13,815
|2.9
|{{Increase}}4.1 %
|{{IncreaseNegative}}29.2 %
|{{IncreaseNegative}}1.3 %
|{{IncreaseNegative}}32.6 %
|-
|1985
|{{Increase}}3.5
|{{Increase}}14,630
|3.0
|{{Increase}}3.3 %
|{{IncreaseNegative}}32.3 %
|{{DecreasePositive}}0.9 %
|{{DecreasePositive}}32.1 %
|-
|1986
|{{Increase}}3.8
|{{Increase}}15,733
|4.0
|{{Increase}}6.3 %
|{{IncreaseNegative}}21.3 %
|{{DecreasePositive}}0.7 %
|{{DecreasePositive}}30.0 %
|-
|1987
|{{Increase}}4.3
|{{Increase}}17,273
|5.6
|{{Increase}}8.5 %
|{{IncreaseNegative}}18.8 %
|{{DecreasePositive}}0.4 %
|{{DecreasePositive}}27.4 %
|-
|1988
|{{Increase}}4.4
|{{Increase}}17,553
|6.1
|{{Decrease}}−0.1 %
|{{IncreaseNegative}}25.5 %
|{{IncreaseNegative}}0.6 %
|{{IncreaseNegative}}30.7 %
|-
|1989
|{{Increase}}4.6
|{{Increase}}18,148
|5.7
|{{Increase}}0.3 %
|{{IncreaseNegative}}14.5 %
|{{IncreaseNegative}}1.7 %
|{{IncreaseNegative}}35.4 %
|-
|1990
|{{Increase}}4.8
|{{Increase}}18,884
|6.5
|{{Increase}}1.2 %
|{{IncreaseNegative}}15.5 %
|{{IncreaseNegative}}2.6 %
|{{IncreaseNegative}}35.6 %
|-
|1991
|{{Increase}}5.0
|{{Increase}}19,180
|6.9
|{{Decrease}}−0.2 %
|{{IncreaseNegative}}6.8 %
|{{DecreasePositive}}2.5 %
|{{IncreaseNegative}}37.7 %
|-
|1992
|{{Decrease}}4.9
|{{Decrease}}18,763
|7.1
|{{Decrease}}−3.4 %
|{{IncreaseNegative}}4.0 %
|{{IncreaseNegative}}4.2 %
|{{IncreaseNegative}}45.5 %
|-
|1993
|{{Increase}}5.1
|{{Increase}}19,265
|6.2
|{{Increase}}1.3 %
|{{IncreaseNegative}}4.1 %
|{{IncreaseNegative}}5.3 %
|{{IncreaseNegative}}52.4 %
|-
|1994
|{{Increase}}5.4
|{{Increase}}20,239
|6.4
|{{Increase}}3.6 %
|{{Increase}}1.6 %
|{{Steady}}5.3 %
|{{IncreaseNegative}}54.9 %
|-
|1995
|{{Increase}}5.5
|{{Increase}}20,610
|7.1
|{{Increase}}0.1 %
|{{Increase}}1.7 %
|{{DecreasePositive}}4.8 %
|{{IncreaseNegative}}58.2 %
|-
|1996
|{{Increase}}5.9
|{{Increase}}21,834
|7.4
|{{Increase}}4.8 %
|{{IncreaseNegative}}2.3 %
|{{DecreasePositive}}3.7 %
|{{DecreasePositive}}55.4 %
|-
|1997
|{{Increase}}6.3
|{{Increase}}23,084
|7.6
|{{Increase}}4.9 %
|{{Increase}}1.8 %
|{{Steady}}3.7 %
|{{DecreasePositive}}52.2 %
|-
|1998
|{{Increase}}6.8
|{{Increase}}24,678
|8.5
|{{Increase}}7.1 %
|{{Increase}}1.7 %
|{{DecreasePositive}}2.9 %
|{{DecreasePositive}}43.9 %
|-
|1999
|{{Increase}}7.2
|{{Increase}}25,721
|9.0
|{{Increase}}3.9 %
|{{IncreaseNegative}}3.2 %
|{{DecreasePositive}}2.0 %
|{{DecreasePositive}}39.2 %
|-
|2000
|{{Increase}}7.7
|{{Increase}}27,098
|9.0
|{{Increase}}4.6 %
|{{IncreaseNegative}}5.1 %
|{{IncreaseNegative}}2.2 %
|{{DecreasePositive}}37.5 %
|-
|2001
|{{Increase}}8.2
|{{Increase}}28,481
|8.2
|{{Increase}}3.9 %
|{{IncreaseNegative}}6.4 %
|{{IncreaseNegative}}2.3 %
|{{IncreaseNegative}}42.8 %
|-
|2002
|{{Increase}}8.3
|{{Increase}}28,886
|9.3
|{{Increase}}0.6 %
|{{IncreaseNegative}}5.2 %
|{{IncreaseNegative}}3.1 %
|{{DecreasePositive}}39.4 %
|-
|2003
|{{Increase}}8.7
|{{Increase}}29,939
|11.4
|{{Increase}}2.4 %
|{{IncreaseNegative}}2.1 %
|{{IncreaseNegative}}3.4 %
|{{DecreasePositive}}38.4 %
|-
|2004
|{{Increase}}9.7
|{{Increase}}32,905
|13.8
|{{Increase}}8.1 %
|{{IncreaseNegative}}3.2 %
|{{DecreasePositive}}3.1 %
|{{DecreasePositive}}33.0 %
|-
|2005
|{{Increase}}10.6
|{{Increase}}35,374
|16.9
|{{Increase}}6.4 %
|{{IncreaseNegative}}4.0 %
|{{DecreasePositive}}2.6 %
|{{DecreasePositive}}24.7 %
|-
|2006
|{{Increase}}11.5
|{{Increase}}37,322
|17.5
|{{Increase}}5.0 %
|{{IncreaseNegative}}6.7 %
|{{IncreaseNegative}}2.9 %
|{{IncreaseNegative}}29.3 %
|-
|2007
|{{Increase}}12.9
|{{Increase}}40,892
|21.7
|{{Increase}}9.4 %
|{{IncreaseNegative}}5.1 %
|{{DecreasePositive}}2.3 %
|{{DecreasePositive}}27.3 %
|-
|2008
|{{Increase}}13.4
|{{Increase}}41,867
|18.1
|{{Increase}}1.7 %
|{{IncreaseNegative}}12.7 %
|{{IncreaseNegative}}3.0 %
|{{IncreaseNegative}}67.1 %
|-
|2009
|{{Decrease}}12.6
|{{Decrease}}39,657
|13.2
|{{Decrease}}−6.5 %
|{{IncreaseNegative}}12.0 %
|{{IncreaseNegative}}7.2 %
|{{IncreaseNegative}}82.3 %
|-
|2010
|{{Decrease}}12.3
|{{Decrease}}38,594
|13.8
|{{Decrease}}−3.6 %
|{{IncreaseNegative}}5.4 %
|{{IncreaseNegative}}7.6 %
|{{IncreaseNegative}}87.8 %
|-
|2011
|{{Increase}}12.8
|{{Increase}}40,022
|15.2
|{{Increase}}2.0 %
|{{IncreaseNegative}}4.0 %
|{{DecreasePositive}}7.1 %
|{{IncreaseNegative}}94.7 %
|-
|2012
|{{Increase}}13.2
|{{Increase}}41,005
|14.8
|{{Increase}}3.9 %
|{{IncreaseNegative}}5.2 %
|{{DecreasePositive}}6.0 %
|{{DecreasePositive}}92.1 %
|-
|2013
|{{Increase}}13.9
|{{Increase}}42,953
|16.1
|{{Increase}}4.3 %
|{{IncreaseNegative}}3.9 %
|{{DecreasePositive}}5.4 %
|{{DecreasePositive}}84.3 %
|-
|2014
|{{Increase}}15.6
|{{Increase}}46,239
|17.9
|{{Increase}}2.2 %
|{{Increase}}2.0 %
|{{DecreasePositive}}5.0 %
|{{DecreasePositive}}81.8 %
|-
|2015
|{{Increase}}16.3
|{{Increase}}49,470
|17.5
|{{Increase}}4.4%
|{{Increase}}1.6 %
|{{DecreasePositive}}4.0 %
|{{DecreasePositive}}67.6 %
|-
|2016
|{{Increase}}17.9
|{{Increase}}53,986
|20.8
|{{Increase}}7.5 %
|{{Increase}}1.7 %
|{{DecreasePositive}}3.0 %
|{{DecreasePositive}}52.4 %
|-
|2017
|{{Increase}}19.2
|{{Increase}}56,904
|24.7
|{{Increase}}4.1 %
|{{Increase}}1.8 %
|{{DecreasePositive}}2.8 %
|{{DecreasePositive}}40.9 %
|}

==External trade==
Iceland's economy is highly export-driven. Marine products account for the majority of goods exports. Other important exports include aluminium, ferro-silicon alloys, machinery and electronic equipment for the fishing industry, software, woollen goods. Most of Iceland's exports go to the [[European Union]] (EU) and [[European Free Trade Association]] (EFTA) countries, the [[Economy of the United States|United States]], and [[Economy of Japan|Japan]]. The 2020 value of Iceland's exports was $7.43 billion [[FOB (shipping)|FOB]].<ref name="factbook">{{Cite web|url=https://www.cia.gov/the-world-factbook/countries/iceland/|title=The World Factbook - Iceland - Economy|publisher=Central Intelligence Agency|access-date=2006-06-21}}</ref>

The main imports are machinery and equipment, [[petroleum]] products, foodstuffs and textiles. Cement is Iceland's most imported product. The total 2020 value of imports was $7.55 billion. In 2019, Iceland's primary import partner was [[Economy of Norway|Norway]]  (11%), followed by [[Economy of the Netherlands|the Netherlands]] (10%), [[Economy of Germany|Germany]] (8%), [[Economy of Denmark|Denmark]] (8%), [[Economy of the United States|United States]] (7%), [[Economy of the United Kingdom|United Kingdom]] (6%), [[Economy of China|PRC China]] (6%), and [[Economy of Sweden|Sweden]] (5%). Most agricultural products are subject to high [[tariffs]]; the import of some products, such as uncooked meat, is greatly restricted for phyto-sanitary reasons.<ref name="factbook"/><ref name="buyusa.gov">{{Cite web | url=http://www.buyusa.gov/iceland/en/86.html#_section4 | title=Country Commercial Guide - Iceland | publisher=[[United States Commercial Service]] | access-date = 2006-06-21 |archive-url = https://web.archive.org/web/20060615140041/http://www.buyusa.gov/iceland/en/86.html#_section4 <!-- Bot retrieved archive --> |archive-date = 2006-06-15}}</ref>

Iceland's relatively liberal trading policy has been strengthened by accession to the [[European Economic Area]] in 1993 and by the [[Uruguay Round]], which also brought significantly improved market access for Iceland's exports, particularly [[seafood]] products. However, the agricultural sector remains heavily subsidized and protected; some [[tariff]]s range as high as 700%.

The [[fishing]] industry is one of the most important industries. It provides 40% of [[export]] income and employs 7.0% of the workforce; therefore, the state of the economy remains sensitive to world prices for fish products.<ref name="factbook"/>

When corrected for the dramatic depreciation of the [[Icelandic króna]] in 2008 (approximately 50% against the euro and US dollar), imports since the 2007 peak have been negative.{{fact|date=September 2024}}
{{out of date|date=February 2025}}
{{col-begin}}
{{col-2}}
===Imports===
{{col-begin}}
{{col-2}}
{|class="wikitable" style="text-align: right;"
|-
!Year
!Millions (ISK)
!Change
|-
|1988
|68,723.2
|{{Steady}} 0.00%
|-
|1989
|80,599.4
|{{Increase}} 17.28%
|-
|1990
|96,620.7
|{{Increase}} 19.88%
|-
|1991
|104,129.1
|{{Increase}} 7.77%
|-
|1992
|96,895.3
|{{Decrease}} 6.95%
|-
|1993
|91,306.6
|{{Decrease}} 5.77%
|-
|1994
|102,541.3
|{{Increase}} 12.30%
|-
|1995
|113,613.6
|{{Increase}} 10.80%
|-
|1996
|135,994.5
|{{Increase}} 19.70%
|-
|1997
|143,226.6
|{{Increase}} 5.32%
|-
|1998
|176,072.1
|{{Increase}} 22.93%
|-
|1999
|182,321.5
|{{Increase}} 3.55%
|-
|2000
|203,222.1
|{{Increase}} 11.46%
|}
<small>Source: [[Statistics Iceland]] ([http://www.statice.is/?PageID=1260&src=/temp_en/Dialog/varval.asp?ma=UTA01202%26ti=Export+and+imports+by+months+1988-2011%26path=../Database/utanrikisverslun/Voruskipti/%26lang=1%26units=Fob%20and%20CIF%20million%20ISK statice.is])</small>
{{col-2}}
{|class="wikitable" style="text-align: right;"
|-
!Year
!Millions (ISK)
!Change
|-
|2001
|220,874.0
|{{Increase}} 8.69%
|-
|2002
|207,607.5
|{{Decrease}} 6.01%
|-
|2003
|216,525.1
|{{Increase}} 4.30%
|-
|2004
|260,430.8
|{{Increase}} 20.28%
|-
|2005
|313,854.6
|{{Increase}} 20.51%
|-
|2006
|437,086.3
|{{Increase}} 39.26%
|-
|2007
|429,468.9
|{{Decrease}} 1.74%
|-
|2008
|514,739.3
|{{Increase}} 19.86%
|-
|2009
|446,128.2
|{{Decrease}} 13.33%
|-
|2010
|477,222.3
|{{Increase}} 6.97%
|-
|2011
|561,626.1
|{{Increase}} 17.69%
|-
|2012
|597,262.2
|{{Increase}} 6.35%
|}
{{col-end}}
{{col-2}}
===Exports===
{{col-begin}}
{{col-2}}
{|class="wikitable" style="text-align: right;"
|-
!Year
!Millions (ISK)
!Change
|-
|1988
|61,600.0
|{{Steady}} 0.00%
|-
|1989
|80,071.7
|{{Increase}} 29.85%
|-
|1990
|92,625.1
|{{Increase}} 15.68%
|-
|1991
|91,560.4
|{{Decrease}} 1.15%
|-
|1992
|87,832.8
|{{Decrease}} 4.07%
|-
|1993
|94,657.6
|{{Increase}} 7.77%
|-
|1994
|112,653.8
|{{Increase}} 19.01%
|-
|1995
|116,606.7
|{{Increase}} 3.51%
|-
|1996
|126,303.8
|{{Increase}} 8.32%
|-
|1997
|131,213.2
|{{Increase}} 3.89%
|-
|1998
|136,592.0
|{{Increase}} 4.10%
|-
|1999
|144,928.1
|{{Increase}} 6.10%
|-
|2000
|149,272.8
|{{Increase}} 3.00%
|}
{{col-2}}
{|class="wikitable" style="text-align: right;"
|-
!Year
!Millions (ISK)
!Change
|-
|2001
|196,582.2
|{{Increase}} 31.69%
|-
|2002
|204,303.0
|{{Increase}} 3.93%
|-
|2003
|182,580.0
|{{Decrease}} 10.63%
|-
|2004
|202,373.0
|{{Increase}} 10.84%
|-
|2005
|194,355.3
|{{Decrease}} 3.96%
|-
|2006
|242,740.0
|{{Increase}} 24.90%
|-
|2007
|305,095.8
|{{Increase}} 25.69%
|-
|2008
|466,859.5
|{{Increase}} 53.02%
|-
|2009
|500,854.5
|{{Increase}} 7.28%
|-
|2010
|561,032.2
|{{Increase}} 12.02%
|-
|2011
|620,127.4
|{{Increase}} 10.53%
|-
|2012
|633,029.1
|{{Increase}} 2.08%
|}{{col-end}}{{col-end}}

==Economic agreements and policies==
Iceland became a full [[European Free Trade Association]] member in 1970 and entered into a free trade agreement with the [[European Community]] in 1973. Under the agreement on a [[European Economic Area]], effective January 1, 1994, there is basically free cross-border movement of [[Capital (economics)|capital]], [[labour (economics)|labor]], [[Good (economics)|goods]], and services between Iceland, [[Norway]], and the EU countries. However, many of Iceland's political parties remain opposed to EU membership, primarily because of Icelanders' concern about losing control over their fishing resources. Iceland also has bilateral free trade agreements with several countries outside the EEA. The most extensive of these is the [[Hoyvík Agreement]] between Iceland and the [[Faroe Islands]], this agreement goes even further than the EEA agreement by establishing free trade in agricultural products between the nations. Iceland has a free trade agreement with Mexico on November 27, 2000.<ref>{{cite journal |last1=Jónsson |first1=Guðmundur |title=Iceland and the Nordic Model of Consensus Democracy |journal=Scandinavian Journal of History |date=8 August 2014 |volume=39 |issue=4 |pages=510–528 |doi=10.1080/03468755.2014.935473 |url=https://www.tandfonline.com/doi/full/10.1080/03468755.2014.935473 |access-date=5 December 2024 |issn=0346-8755}}</ref>

==Currency and monetary policy==
{{Main|Icelandic króna}}
The currency of Iceland is the ''króna'' (plural: ''krónur''), issued exclusively by the [[Central Bank of Iceland]] since the bank's founding in 1961.<ref>{{Cite web | url=http://www.sedlabanki.is/?PageID=187 | title=Notes and Coin | publisher=Central Bank of Iceland | access-date=2006-06-21 | archive-url=https://web.archive.org/web/20060619111253/http://www.sedlabanki.is/?pageid=187 | archive-date=2006-06-19 }}</ref> Iceland is the least populous country to have its own currency and monetary policy.<ref>{{Cite news|url=https://www.npr.org/sections/money/2011/05/23/136149022/the-island-that-ran-out-of-money|title=The Island That Ran Out Of Money|work=NPR.org|access-date=2017-10-09|language=en}}</ref><ref>{{Cite news|url=https://beta.theglobeandmail.com/report-on-business/economy/currencies/canadian-envoy-to-iceland-sparks-loonie-controversy/article552619/?ref=https://www.theglobeandmail.com&|title=Canadian envoy to Iceland sparks loonie controversy|date=2012-03-02|work=The Globe and Mail|access-date=2017-10-09|language=en-GB}}</ref><ref>{{Cite book|url=https://books.google.com/books?id=Er-6QkkQkeEC&q=smallest+countries+with+their+own+currency+iceland&pg=PA36|title=Manias, Panics and Crashes: A History of Financial Crises, Sixth Edition|last1=Kindleberger|first1=Charles P.|last2=Aliber|first2=Robert Z.|date=2011-08-09|publisher=Palgrave Macmillan|isbn=9780230367562|language=en}}{{Dead link|date=February 2023 |bot=InternetArchiveBot |fix-attempted=yes }}</ref>
[[File:EUR against ISK 2000-2009.png|thumb|Exchange rate for the krona to the euro from 2000 to mid-2010]]
During the 1970s the oil shocks ([[1973 oil crisis|1973]] and [[1979 energy crisis]]) hit Iceland hard. Inflation rose to 43% in 1974 and 59% in 1980, falling to 15% in 1987 but rising to 30% in 1988. Iceland experienced moderately strong GDP growth (3% on average) from 1995 to 2004. Growth slowed between 2000 and 2002, but the economy expanded by 4.3% in 2003 and grew by 6.2% in 2004. Growth in 2005 exceeded 6%. Inflation averaged merely 1.5% from 1993 to 1994, and only 1.7% from 1994 to 1995. Inflation over 2006 topped at 8.6%, with a rate of 6.9% as of January 2007. [[Standard & Poor's]] reduced their rating for Iceland to AA− from A+ (long term) in December 2006, following a loosening of fiscal policy by the Icelandic government ahead of the 2007 elections.<ref>[http://www.sedlabanki.is/lisalib/getfile.aspx?itemid=4904 Republic of Iceland Cut To FC 'A+/A-1', LC 'AA/A-1+' On Unbalanced Policy Mix; Outlook Stable]. Press release No. 48, 22 December 2006.</ref><ref>{{Cite news| url=http://www.economist.com/finance/displaystory.cfm?story_id=9516621 | newspaper=The Economist | title=Vanishing vigilantes | date=2007-07-19}}</ref> Foreign debt rose to more than five times the value of Iceland's GDP, and Iceland's Central Bank raised short-term interest rates to nearly 15% in 2007. Due to the plunging currency against the euro and dollar, in 2008 inflation was speculated to be at 20-25%.<ref>{{Cite book |last1=Aliber |first1=R. |url=https://books.google.com/books?id=ebGDDAAAQBAJ&q=smallest+countries+with+their+own+currency+iceland&pg=PA1 |title=Preludes to the Icelandic Financial Crisis |last2=Zoega |first2=G. |date=2011-01-19 |publisher=Springer |isbn=9780230307148 |language=en}}</ref>

Inflation increased during the [[2008–2011 Icelandic financial crisis]], and the Central Bank of Iceland pegged the krona's value to the euro at increasingly higher and higher rates in an attempt to keep the currency stable,<ref>Mason, Rowena. "[https://www.telegraph.co.uk/finance/newsbysector/banksandfinance/3154116/Financial-crisis-Iceland-nationalises-bank-and-seeks-Russian-loan.html Financial crisis: Iceland nationalises bank and seeks Russian loan]". ''[[The Daily Telegraph]]''. 8 October 2008.</ref> eventually pegging it at 340 kronur per euro before all trade in the currency was suspended.<ref>Brogger, Tasneem; Einarsdottir, Helga Kristin. "Icelandic Shoppers Splurge as Currency Woes Reduce Food Imports". [[Bloomberg, L.P.]] 13 October 2008.</ref> The krona similarly fell in value against the US dollar, going from around 50–80 per dollar to about 110–115 per dollar. By November 2008, it had continued to lower to 135 to the dollar. By early April 2009, the value hovered around 119 per dollar, roughly maintaining that value over the next two years.<ref>"[https://finance.yahoo.com/quote/USDISK=X/ USDISK=X : Summary for USD/ISK - Yahoo Finance]". ''yahoo.com''. Retrieved 2 April 2018.</ref> The currency has stabalized since the crisis, with 1 US$ being worth 137.22 Icelandic kronur in September 2024.<ref>{{Cite web |title=USD/ISK Currency Exchange Rate & News |url=https://www.google.com/finance/quote/USD-ISK |access-date=2025-02-27 |website=Google Finance |language=en-US}}</ref>

Despite being heavily integrated into European Union via the [[European Economic Area]] (EEA) and the [[Schengen Agreement]], Iceland does not use the [[euro]]. Then-Deputy Governor of the Central Bank of Iceland, Arnór Sighvatsson, said that Iceland would not adopt the euro "as it entails extra cost of purchase of new base money for the banking system  and larger precautionary foreign exchange reserves.<ref>"Arnór Sighvatsson: Iceland's future monetary and exchange rate regime" (PDF).</ref>

==Growth==
Iceland's economy had been diversifying into [[manufacturing]] and [[service industries]] in the 1990s, and new developments in [[software]] production, [[biotechnology]], and [[financial services]] were taking place. The [[tourism in Iceland|tourism sector]] was also expanding, with the recent trends in [[ecotourism]] and [[whale watching]]. However, in 2008, the Icelandic economy entered a deep [[recession]] during the [[Great Recession]]. Although Iceland's economy grew 3.3% during the last quarter of 2009, the overall contraction in GDP over 2009 was 6.5%, less than the 10% originally forecasted by the IMF.<ref>[http://news.bbc.co.uk/1/hi/business/7784354.stm Iceland scowls at UK after crisis], ''[[BBC]]'', December 16, 2008.</ref><ref>[http://news.bbc.co.uk/1/hi/business/8551662.stm Iceland set to vote on debt repayment after talks fail], ''[[BBC]]'', March 5, 2010.</ref>

==See also==
*[[List of companies of Iceland]]
*[[List of Icelandic brands]]
*[[Accession of Iceland to the European Union]]

==Notes==
{{Reflist|30em}}

==External links==
{{Commons category}}
*[http://www.oecd.org/iceland/ OECD's Iceland country Web site]
*[https://web.archive.org/web/20150924131938/http://www.oecd.org/eco/surveys/iceland/ OECD Economic Survey of Iceland]
*[http://www.statice.is Icelandic Bureau of Statistics]
*[http://www.icex.is Iceland Stock Exchange (ICEX)]
*[http://www.askjaenergy.org/ Icelandic Energy Portal]
*[http://www.kaupthing.com Integrated financial services in Iceland]
*[http://www.link2exports.co.uk/marketprofiles/regions.asp?lsid=1458/ Iceland Country Exports Profile]{{dead link|date=September 2017 |bot=InternetArchiveBot |fix-attempted=yes }}
*[https://www.npr.org/templates/story/story.php?storyId=102119511 Exploding Range Rovers Tell Iceland's Story] ''NPR'', March 19, 2009
*[http://www.vanityfair.com/politics/features/2009/04/iceland200904?printable=true&currentPage=all Wall Street on the Tundra] by Michael Lewis, ''Vanity Fair'', April 2009 issue

{{Iceland topics}}
{{EFTA}}
{{World Trade Organization}}
{{Organisation for Economic Co-operation and Development}}
{{Economy of Europe}}
{{DEFAULTSORT:Economy Of Iceland}}
[[Category:Economy of Iceland| ]]
[[Category:European Free Trade Association|Iceland]]
[[Category:OECD member economies|Iceland]]
[[Category:World Trade Organization member economies|Iceland]]
[[Category:Economies of Europe by country|Iceland]]