Iceland

Economic and political outline

Economic indicators | Foreign Trade in figures | Sources of economic information | Political outline

Economic indicators

Iceland experienced a decade of strong economic growth during 1990s because of economic reforms and deregulation. However, as with many advanced countries, Iceland’s economy experienced a mild recession. Fmi forecasts a zero growth rate for 2008. Inflation is estimated to have reached 4.8% in 2007. The unemployment rate is under control at around 3%.

GDP Indicators	2004	2005	2006	2007	2008
GDP (billions USD)	13.22	16.23	16.31	19.52e	19.94e
GDP (constant prices, annual % change)	7.6	7.2	2.6	2.1e	-0.1e
GDP per capita (USD)	45,038.00	54,115.71	53,001.20	62,976.13e	63,874.74e
General government balance (in % of GDP)	0.2	5.2	5.3	3.2e	-1.3e
Inflation rate (%)	3.2	4.0	6.8	4.8e	3.3e
Unemployment rate (% of the labor force)	3.1	2.1	1.3	2.0	3.2
Current Account (billions USD)	-1.30	-2.62	-4.45	-2.26e	-1.19e
Current Account (in % of GDP)	-9.8	-16.1	-27.3	-11.6e	-6.0e

Source: IMF - World Economic Outlook Database

Note: (e) Estimated data

Socio-demographic indicators	2006	2007	2008
Unemployment rate (%)	1.3	2.0	3.2

Source:

Main sectors of industry

The agriculture sector employs 4% of the Icelandic active population and is mainly dominated by breeding. Fishing is the major economic activity. It accounts for 13% of the GDP and employs 10% of the active population. Iceland has abundant hydroelectric and geothermal power sources which contribute 29% to country’s GDP and supplies to more than 90% of the country’s population. The industrial sector generates 29% of the GDP. Manufacturing industry works on a small scale. In the mid-term, sectors having strongest development potential are: energy and renewable energy, biomedical research, tourism, and pharmaceutical.

Breakdown of economic activity by sector	Agriculture	Industry	Services
Value added (annual % change)	3.8	10.7	7.7
Value added (in % of GDP)	6.7	24.8	68.4
Employment by sector (in % of total employment)	7.2	23.1	69.0

Source: World Bank - World Development Indicators - last available data.

Monetary indicators	2002	2003	2004	2005	2006
Average annual exchange rate for 1 USD	91.66	76.71	70.19	62.98	70.20

Source: World Bank - World Development Indicators

Foreign trade in figures

Iceland has always been open to international trade. The share of foreign trade in country’s GDP is more than 80%. Almost half of the exports are fishing products. Its top three export partners are: the United Kingdom, Germany and the Netherlands. Besides fishing products, Iceland also exports aluminium and meat. The top three import partners are: Germany, the U.S.A., and Sweden. Except fishing and some agricultural products, Iceland imports everything especially vehicles, machinery, mineral fuels & oils, and computer products.

Foreign trade indicators	2002	2003	2004	2005	2006
Imports of goods (millions USD)	2,090	2,596	3,415	4,590	5,574
Exports of goods (millions USD)	2,240	2,386	2,896	3,107	3,477
Imports of services (millions USD)	1,123	1,503	1,838	2,560	2,587
Exports of services (millions USD)	1,118	1,378	1,623	2,041	1,806
Imports of goods and services (annual % change)	-2.6	10.8	14.4	28.4	n.c.
Exports of goods and services (annual % change)	3.8	1.6	8.4	3.5	n.c.
Imports of goods and services (in % of GDP)	36.6	38.0	40.2	45.0	n.c.
Exports of goods and services (in % of GDP)	38.2	34.9	34.6	31.5	n.c.
Trade Balance (millions USD)	150	-210	-519	-1,482	-2,097
Trade Balance (including service) (millions USD)	144	-335	-735	-2,001	-2,878
Current Account (millions USD)	145	-534	-1,317	-2,632	-4,365
Current Account (in % of GDP)	1.7	-4.9	-10.1	-16.6	-27.5
Foreign trade (in % of GDP)	74.9	72.8	74.8	76.6	n.c.

Source: World Bank - World Development Indicators

Main partner countries

Main customers (% of exports)	2006
Netherlands	16.6%
United Kingdom	15.6%
Germany	15.0%
United States	10.9%
Spain	6.4%

Main suppliers (% of imports)	2006
United States	13.1%
Germany	12.4%
Norway	7.2%
Sweden	7.1%
Denmark	6.2%

Source: 2006

Main products

Main exports (% of exports)	2006
Fish and crustaceans, molluscs	43.7%
Aluminum	23.7%
Aircraft, spacecraft	6.2%
Residues and waste from the food industries	4.2%
Preparations of meat, of fish or of crustaceans	3.3%

Main imports (% of imports)	2006
Machinery and mechanical appliances	13.9%
Electrical machinery and equipment	11.6%
Vehicles other than railway or tramway	11.2%
Mineral fuels, mineral oils	8.9%
Aircraft, spacecraft	7.5%

Source: 2006

To see more products: More imports (Intracen Data)
More exports (Intracen Data)

Sources of economic information

Ministries: Ministry of Finance
Statistical Office: Statistics Iceland
Central Bank: Central Bank of Iceland
Stock Exchange: Nordic Exchange
Online newspapers: Daily News
Dagbladid Visir (in Icelandic)
Morgunbladid (in Icelandic)
Search Engines: Iceland on the web
Netfangaskrana
Web Collection

Political outline

Executive Power: President is the chief of the state and is elected by popular vote for a four-year term. 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. 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. 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. 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 often 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 of EU;
- PP (Progressive Party) - an agrarian and liberal political party;
- Alliance – a social-democratic party, based on alliance of People's Alliance (PA), Social Democratic Party (SDP) and Women's List;
- LGM (Left-Green Movement) – advocates traditional socialistic values, feminism and environmentalism;
- LP (Liberal Party) – a liberal party, opposes joining of EU & Iraq war.
Current political leaders: President: Olafur Ragnar GRIMSSON (since August 1996, latest re-election in June 2004) – non-partisan
Prime Minister: Geir H. HAARDE (since June 2006) – IP, running coalition government with PP
Next election dates: Presidential: 2008
Parliamentary: May 2011