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flag Iceland Iceland: Economic and Political Outline

In this page: Economic Indicators | Foreign Trade in Figures | Sources of General Economic Information | Political Outline

 

Economic Indicators

After a period of continuous growth between the second half of the 1990s and 2007, Iceland was badly hit by the global international crisis since October 2008. The rapid expansion of the Icelandic financial system left Iceland completely vulnerable to affront the international financial shocks, up to the point of practically inducing the country into a situation of "national bankruptcy". On top of this Iceland's economy had previously been stimulated by a real estate boom, which contributed to destabilizing the economic situation even more.

Confronted to the total collapse of its financial system, the former government of Geeir Haarde had to nationalize the country's main banks. However, inflation continues to climb (reaching almost 18.6% today). In November 2008, the IMF granted a loan of USD 2 billion in order to stabilize the Icelandic krona's exchange rate, which has suffered considerably due to the crisis, and to re-establish confidence in the economy. In order to benefit from European aid and from the protection that the Euro currency provides, Iceland requested in July 2009 a candidature for its accession to the European Union. The country has officially declined to go further due to the anti-European sentiment of its population.

in 2013 the growth rate reached 1.9% (following 2.5% in 2012) and should come back to 2.5% in 2014. Main factor in this growth rate, household consumption will remain strong in 2014, pushed by the sharp decrease of unemployment (5.6% in 2013 due to the tourism boom), by the increase in salary and by the stabilization of inflation (3.8% in 2013).

 
Main Indicators 20112012201320142015 (e)
GDP (billions USD) 14.0313.5814.6216.2017.22
GDP (Constant Prices, Annual % Change) 2.71.53.3e2.93.0
GDP per Capita (USD) 44,06542,50545e50,00652,967
General Government Balance (in % of GDP) -3.8-2.1-1.9e-0.9-1.0
General Government Gross Debt (in % of GDP) 99.396.989.9e86.488.2
Inflation Rate (%) 4.05.23.9e2.53.3
Unemployment Rate (% of the Labor Force) 7.45.84.44.03.5
Current Account (billions USD) -0.89-0.720.570.330.40
Current Account (in % of GDP) -6.3-5.33.9e2.12.3

Source: IMF - World Economic Outlook Database , Last Available Data

Note: (e) Estimated Data

Main Sectors of Industry

The agricultural sector has contributed in 2013 to 5.9% of the Icelandic GDP, the industrial sector to 22.9% and services to more than 71.2%.

The Icelandic economy relies partly in its renewable natural resources and its related industries: deep sea fishing, hydraulic and geothermal power and pastures.

Fishing accounts for almost 6% of GDP (more than 11% with the processing sector and over 18% when counting its indirect contribution).

It has been several years that its economy has also grown thanks to the services sector. As a fact, Iceland has become the rear-base of several companies specialized in computers and software. There are also many calling centers in the Icelandic territory.

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 5.5 18.2 75.8
Value Added (in % of GDP) 7.7 24.5 67.8
Value Added (Annual % Change) 3.8 1.8 0.7

Source: World Bank - Last Available Data.

 
 
 
Monetary Indicators 20092010201120122013
Iceland Crown (ISK) - Average Annual Exchange Rate For 1 USD 123.64122.24115.95125.08122.18

Source: World Bank - Last Available Data.

 
 

Learn more about Market Analyses about Iceland on Globaltrade.net, the Directory for International Trade Service Providers.

Indicator of Economic Freedom

Definition:

The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labor freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.

Score:
72.4/100
Position:
Mostly Free
World Rank:
23/178
Regional Rank:
13/43

Distribution of Economic freedom in the world
Source: 2014 Index of Economic freedom, Heritage Foundation

 
 

Country Risk

See the country risk analysis provided by Coface.

 

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Foreign Trade in Figures

Iceland has always been open to international trade. Almost half of the exports are fishing products. Iceland also exports aluminum and ferrosilicon (around 40% of its total exports in 2013), as well as dairy products. Tourism has been on a constant rise since 2011, stimulated by the collapse of the national currency. Certain traditional sectors, such as fishing, are doing well, which stimulates the dynamism of the exports.

In 2013, Iceland's main customers have been the Netherland (over 30% of exports), Germany, the UK, Norway and the United-States.

Its main suppliers were Norway (over 17% of imports), the USA, Germany, China and Brazil.

The potentials of hydroelectricity stimulates aluminum production, the leading resource for export concentrating 70% of the electricity produced on the island in 2013.

 
Foreign Trade Indicators 20092010201120122013
Imports of Goods (million USD) 3,6043,9204,8414,7724,783
Exports of Goods (million USD) 4,0574,6045,3475,0644,998
Imports of Services (million USD) 1,9122,1872,5902,7562,866
Exports of Services (million USD) 2,3032,4652,9393,0203,432
Imports of Goods and Services (Annual % Change) -22.44.36.84.90.4
Exports of Goods and Services (Annual % Change) 8.31.83.43.96.9
Imports of Goods and Services (in % of GDP) 40.843.147.950.447.4
Exports of Goods and Services (in % of GDP) 49.753.556.156.755.7
Trade Balance (million USD) 454264197-163
Trade Balance (Including Service) (million USD) 8421,0638165441,777
Foreign Trade (in % of GDP) 90.596.6104.0107.1103.1

Source: WTO - World Trade Organization ; World Bank , Last Available Data

 

Main Partner Countries

Main Customers
(% of Exports)
2014
Netherlands 29.3%
United Kingdom 11.3%
Spain 7.6%
Germany 6.1%
France 5.0%
See More Countries 40.7%
Main Suppliers
(% of Imports)
2014
Norway 14.6%
United States 10.1%
Germany 7.6%
Denmark 7.6%
China 7.4%
See More Countries 52.7%

Source: Comtrade, Last Available Data

 
 

Main Products

- bn USD of products exported in 2014
Unwrought aluminiumUnwrought aluminium 29.9%
Fish fillets and other fish meat, whether or not...Fish fillets and other fish meat, whether or not minced, fresh, chilled or frozen 16.6%
Frozen fish (excl. fish fillets and other fish...Frozen fish (excl. fish fillets and other fish meat of heading 0304) 8.9%
Fish, fit for human consumption, dried, salted or...Fish, fit for human consumption, dried, salted or in brine; smoked fish, fit for human consumption, whether or not cooked before or during the smoking process; flours, meals and pellets of fish, fit for human consumption 7.1%
Aluminium wire (excl. stranded wire, cables,...Aluminium wire (excl. stranded wire, cables, plaited bands and the like and other articles of heading 7614, electrically insulated wires, and strings for musical instruments) 3.5%
See More Products 34.0%
- bn USD of products imported in 2014
Petroleum oils and oils obtained from bituminous...Petroleum oils and oils obtained from bituminous minerals (excl. crude); preparations containing >= 70% by weight of petroleum oils or of oils obtained from bituminous minerals, these oils being the basic constituents of the preparations, n.e.s.; waste oils containing mainly petroleum or bituminous minerals 16.3%
Artificial corundum, whether or not chemically...Artificial corundum, whether or not chemically defined; aluminium oxide; aluminium hydroxide 9.2%
Carbon electrodes, carbon brushes, lamp carbons,...Carbon electrodes, carbon brushes, lamp carbons, battery carbons and other articles of graphite or other carbon, with or without metal, of a kind used for electrical purposes 6.9%
Motor cars and other motor vehicles principally...Motor cars and other motor vehicles principally designed for the transport of persons, incl. station wagons and racing cars (excl. motor vehicles of heading 8702) 4.0%
Medicaments consisting of mixed or unmixed...Medicaments consisting of mixed or unmixed products for therapeutic or prophylactic uses, put up in measured doses incl. those in the form of transdermal administration or in forms or packings for retail sale (excl. goods of heading 3002, 3005 or 3006) 2.4%
See More Products 61.1%

Source: Comtrade, Last Available Data

 
See More Products
More imports (Intracen Data)
More exports (Intracen Data)
 
 
 

Main Services

- bn USD of services exported in 2011
46.01%
25.20%
14.85%
7.35%
1.87%
1.44%
1.12%
1.02%
0.72%
0.25%
0.17%
- bn USD of services imported in 2011
30.08%
28.37%
28.06%
3.72%
2.48%
2.37%
2.22%
1.41%
0.76%
0.50%
0.03%

Source: Comtrade, Last Available Data

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Sources of General Economic Information

Ministries
Ministry of Finance
Ministry of Foreign Affairs
Statistical Office
Statistics Iceland
Central Bank
Central Bank of Iceland
Stock Exchange
Nordic Exchange
Search Engines
Iceland on the web
Web Collection
Economic Portals
Portal to the world: Iceland page

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Political Outline

Executive Power
The President is the head of the state and is elected by popular vote for a four-year term. The President’s role is largely ceremonial. Following legislative elections, the leader of the majority party or the leader of the majority coalition is usually appointed as the Prime Minister by the President for a four year term.

The Prime Minister is the head of the government and holds the executive powers which include implementation of the law in the country and running the day-to-day affairs. The Prime Minister also appoints the Cabinet.

Legislative Power
The legislature in Iceland is unicameral. The Parliament consists of 63 seats, its members are elected by popular vote to serve four-year terms. The executive branch of government is directly or indirectly dependent on the support of the parliament, often expressed through a vote of confidence. The Prime Minister cannot dissolve the parliament directly but can recommend the same to the President. Legislative power is vested in both the government and the parliament. The people of Iceland enjoy considerable political rights.
Main Political Parties
Iceland has a multi-party system, with numerous parties in which no one party has a chance of gaining power alone, and parties must work with each other to form coalition governments. The major political parties in the country are:

- IP (Independence Party) – centre-right conservative political party, opposes joining the EU;

- PP (Progressive Party) - an agrarian and liberal political party;

- Alliance – a social-democratic party, based on the alliance of the People's Alliance (PA), Social Democratic Party (SDP) and Women's List;

- LGM (Left Green Movement) – advocates traditional socialist values, feminism and environmentalism;

- LP (Liberal Party) – a liberal party, opposes joining the EU and the war in Iraq.

Current Political Leaders
President: Olafur Ragnar GRIMSSON (since August 1996, latest re-election in June 2004) – non-partisan
Prime Minister: Sigmundur David GUNNLAUGSSON (since 23 May 2013) – Fram
Next Election Dates
Presidential: June 2016
 

Indicator of Freedom of the Press

Definition:

The world rankings, published annually, measures the violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position are assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire sent to partner organizations,150 RWB correspondents, journalists, researchers, jurists and activists of human rights, including the main criteria - 44 in total - to assess the situation of press freedom in a given country. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).

World Rank:
8/180
Evolution:
1 place up compared to 2013

Source: Worldwide Press Freedom Index 2014, Reporters Without Borders

 

Indicator of Political Freedom

Definition:

The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.

Ranking:
Free
Political Freedom:
1/7

Map of freedom 2014
Source: Freedom House

 

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Last Updates: February 2015