The President of Iceland
National Energy Authority
The Institute of Economic Studies
Economy & Infrastructure
Iceland achieved an impressive economic record the last decade, with one of the highest consistent growth rates in the world and low inflation and unemployment. At the end of 2008, however, Iceland was in the headlines of the international press for unenviable reasons. In the wake of the global financial crisis, Iceland's three largest private banks experienced major liquidity problems and were, within the space of a few days, taken into government administration.
The collapse of the banking sector, which was very large relative to Iceland’s economy, together with rapid depreciation of the Icelandic krona, brought about an unprecedented economic and financial crisis.
However, the foundations of the Icelandic economy remain strong and Iceland is moving towards economic recovery with multilateral assistance from the International Monetary Fund playing a key role. Iceland’s clean energy, its marine resources, strong infrastructure and well-educated workforce, provide a firm basis to overcome the current economic difficulties and implement necessary reforms.
The basic sectors in the Icelandic economy are various services (accounting for 57% of GDP in 2009), manufacturing industries, construction and utilities (23.4% of GDP), and fisheries (6.3% of GDP). Public ownership has bee systematically phased down by privatization and the main role of the public sector is in energy, health, education and social welfare. The export base is relatively narrow and largely based on natural resources, namely fisheries, energy intensive industries, and tourism and these industries are predominantly occupied by small and medium-sized businesses.
Foreign investment is mainly concentrated in export-orientated sectors, with possibilities in new and exciting sectors in the field of information technology, environmentally friendly energy dependant industries, agriculture, water based industries and tourism which has grown increasingly in the last few years. Industrial investment in Iceland has grown considerably since 1995 and is likely to increase in the coming years. The labour force is relatively young compared with neighbouring countries, with 67% of the population aged between 15 and 64.