Exporting

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Settled by Norwegian and Celtic (Scottish and Irish) immigrants during the late 9th and 10th centuries A.D., Iceland boasts the world's oldest functioning legislative assembly, the Althingi, established in 930. Independent for over 300 years, Iceland was subsequently ruled by Norway and Denmark. Fallout from the Askja volcano of 1875 devastated the Icelandic economy and caused widespread famine. Over the next quarter century, 20% of the island's population emigrated, mostly to Canada and the US. Denmark granted limited home rule in 1874 and complete independence in 1944. The second half of the 20th century saw substantial economic growth driven primarily by the fishing industry. The economy diversified greatly after the country joined the European Economic Area in 1994, but Iceland was especially hard hit by the global financial crisis in the years following 2008. The economy is now on an upward trajectory, fueled primarily by a tourism and construction boom. Literacy, longevity, and social cohesion are first rate by world standards.

Location

Northern Europe, island between the Greenland Sea and the North Atlantic Ocean, northwest of the United Kingdom

Natural Resources

fish, hydropower, geothermal power, diatomite

Population - distribution

Iceland is almost entirely urban with half of the population located in and around the capital of Reykjavik; smaller clusters are primarily found along the coast in the north and west

308910
Icelandic, English, Nordic languages, German widely spoken
REYKJAVIK (capital) 184,000 (2014)
Conventional long form
Republic of Iceland
Conventional short form
Iceland
Local long form
Lydveldid Island
Local short form
Island
parliamentary republic
Name
Reykjavik
Geographic coordinates
64 09 N, 21 57 W
Time difference
UTC 0 (5 hours ahead of Washington, DC, during Standard Time)
has not submitted an ICJ jurisdiction declaration; accepts ICCt jurisdiction
Iceland's economy combines a capitalist structure and free-market principles with an extensive welfare system. Except for a brief period during the 2008 crisis, Iceland has achieved high growth, low unemployment, and a remarkably even distribution of income. The economy depends heavily on the fishing industry, which provides 40% of merchandise export earnings, more than 12% of GDP, and employs nearly 5% of the work force. It remains sensitive to declining fish stocks, as well as to fluctuations in world prices for its main exports: fish and fish products, aluminum, and ferrosilicon. Since 2010, tourism has become the main pillar of Icelandic economic growth, with the number of tourists reaching 4.5 times the Icelandic population in 2016.
Inflation
1.695%
Total tax rate (% of commercial profits)
30.1%
Real Interest Rate
6.071%
Manufacturing, value added (% of GDP)
11.56%
Current Account Balance
US$ 1,632,286,531
Labor Force, Total
197,204
Employment in Agriculture
3.90%
Employment in Industry
17.76%
Employment in Services
78.34%
Unemployment Rate
3.76%
Imports of goods and services
US$ 8,529,267,413
Exports of goods and services
US$ 9,844,009,278
Total Merchandise Trade
50.66%
FDI, net inflows
US$ -1,179,666,058
Commercial Service Exports
US$ 5,389,740,996
potatoes, carrots, green vegetables, tomatoes, cucumbers; mutton, chicken, pork, beef, dairy products; fish
tourism, fish processing; aluminum smelting;; geothermal power, hydropower; medical/pharmaceutical products
Commodities
fish and fish products (42%), aluminum (38%), agricultural products, medicinal and medical products, ferro-silicon (2015)
Partners
Netherlands 26.1%, UK 11.6%, Spain 11.5%, Germany 7.4%, France 5.7%, US 5.7%, Norway 4.7% (2015)
Commodities
machinery and equipment, petroleum products, foodstuffs, textiles
Partners
Norway 10.1%, Germany 8.6%, US 7.9%, China 7.9%, Denmark 7.1%, Netherlands 5.9%, Brazil 5.8%, UK 5% (2015)
Country Risk Rating
A2
The political and economic situation is good. A basically stable and efficient business environment nonetheless leaves room for improvement. Corporate default probability is low on average.
Business Climate Rating
A1
The business environment is very good. Corporate financial information is available and reliable. Debt collection is efficient. Institutional quality is very good. Intercompany transactions run smoothly in environments rated A1.
  • Healthier banking sector
  • Gradual decline in the public debt
  • Rich and renewable energy (geothermal, hydroelectricity)
  • Oil and gas reserves
  • Strong tourism potential
  • High foreign reserves
  • Dynamic household consumption
  • Small economy
  • High external debt
  • Concentration of production and exports (aluminum and sea products)
  • Russian embargo on Icelandic seafood products

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