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Economy

Iceland's Scandinavian-ENGINE economy is basically capitalistic, yet with an extensive welfare system, low unemployment, and remarkably even distribution of income. The economy depends heavily on the fishing industry, which provides 75% of export earnings and employs 12% of the work force. In the absence of other natural resources—except energy—Iceland's economy is vulnerable to changing world fish prices. The economy remains sensitive to declining fish stocks as well as to drops in world prices for its main exports: fish and fish products, aluminum, and ferrosilicon. The center-right government plans to continue its policies of reducing the budget and current account deficits, limiting foreign borrowing, containing inflation, revising agricultural and fishing policies, diversifying the economy, and privatizing state-owned industries.

The government remains opposed to EU membership, primarily because of Icelanders' concern about losing control over their fishing resources. Iceland's economy has been diversifying into manufacturing and service industries in the last decade, and new developments in software production, biotechnology, and financial services are taking place. The tourism sector is also expanding, with the recent trends in ecotourism and whale-watching. Growth is likely to slow in 1999, to a still respectable 4.6%.

GDP: purchasing power parity—$6.06 billion (1998 est.)

GDP—real growth rate: 5.1% (1998 est.)

GDP—per capita: purchasing power parity—$22,400 (1998 est.)

GDP—composition by sector:
agriculture: 13%
industry: 24%
services: 63% (1997 est.)

Population below poverty line: NA%

Household income or consumption by percentage share:
lowest 10%: NA%
highest 10%: NA%

Inflation rate (consumer prices): 1.7% (1998)

Labor force: 130,000 (1998 est.)

Labor force—by occupation: manufacturing 12.9%, fishing and fish processing 11.8%, construction 10.7%, other services 59.5%, agriculture 5.1% (1996 est.)

Unemployment rate: 3% (1998 est.)

Budget:
revenues: $1.9 billion
expenditures: $2.1 billion, including capital expenditures of $146 million (1996 est.)

Industries: fish processing; aluminum smelting, ferrosilicon production, geothermal power; tourism

Industrial production growth rate: NA%

Electricity—production: 5.048 billion kWh (1996)

Electricity—production by source:
fossil fuel: 0.06%
hydro: 93.43%
nuclear: 0%
other: 6.51%

Electricity—consumption: 5.532 billion kWh (1997)

Electricity—exports: 0 kWh (1996)

Electricity—imports: 0 kWh (1996)

Agriculture—products: potatoes, turnips; cattle, sheep; fish

Exports: $1.9 billion (f.o.b., 1998)

Exports—commodities: fish and fish products 70%, animal products, aluminum, diatomite and ferrosilicon

Exports—partners: EU 60% (UK 19%, Germany 13%, France 6%, Denmark 6%), US 14% (1997)

Imports: $2.4 billion (f.o.b., 1998)

Imports—commodities: machinery and equipment, petroleum products, foodstuffs, textiles

Imports—partners: EU 58% (Germany 12%, Norway 12%, UK 10%, Denmark 9%, Sweden 7%), US 9% (1997)

Debt—external: $2.2 billion (1996 est.)

Economic aid—recipient: $NA

Currency: 1 Icelandic krona (IKr) = 100 aurar

Exchange rates: Icelandic kronur (IKr) per US$1—69.250 (January 1999), 70.958 (1998), 70.904 (1997), 66.500 (1996), 64.692 (1995), 69.944 (1994)

Fiscal year: calendar year
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