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Economics and business in Iceland

Fishing and fishery products dominate Iceland's economy. The Icelandic economy is therefore very vulnerable to annual fluctuations in catches and prices of fish on the world market. Since the mid-1990s, Iceland has been increasingly developing the service industries and the industrial sector. The country has in recent years focused on developing the IT industry, biotechnology, the financial sector and tourism.

Business of Iceland

Agriculture

About 23 per cent of Iceland's land is productive land, and only 0.1% is cultivated land. Agriculture accounts for 10.8 per cent of gross domestic product (GDP) in 2015. The agricultural area is used substantially for the production of hay, potatoes and root crops. During the saga period grain was grown in Iceland, while there is now only negligible cultivation of barley and oats. Livestock farming is the main industry; Especially sheep breeding is very important with a stock of 487 075 breeding sheep in 2014. Large parts of the sheep team are aimed at the domestic market. In 2014, there were also 226 474 chickens, 26 159 dairy cows and 3644 pigs in Iceland.

According to COUNTRYAAH, Iceland is largely self-sufficient with meat and dairy products, and the production of various vegetables such as cucumbers, peppers and tomatoes has grown strongly thanks to the large-scale construction of earthenware-heated greenhouses.

Fishing

Fisheries form the main basis for the country's economy, and the fight for fishing quotas has naturally been central to Icelandic foreign policy. To secure its economy and raw material base, in 1972 Iceland expanded its fishing limit from 12 to 50 nautical miles, and created a 200-mile fishing zone in 1975. This zone covers an area of ​​758,000 square kilometers.

Iceland has one of the world's most modern fishing fleets. Fishing accounts for 8.1 per cent of GDP in 2018 and engages 3.9 per cent of the workforce.

Cod is caught mainly off the south and west coasts during the period January – May, while herring fishing is substantial during the summer and autumn. In the past, cod was mostly made fresh, salted or as a rockfish, but now about two-thirds are delivered as fillets in the frozen state. Icelandic herring was greatly weakened from the latter part of the 1960s, and the herring oil industry used capelin as raw material rather than herring. Since the 1980s and herring fishing has increased again. The most important fishing villages are Reykjavķk, Vestmannaeyjar, Seyšisfjöršur, Raufarhöfn, Neskaupstašur, Ķsafjöršur and Akranes. Most of the catches are exported, and the value of these catches is about 70 per cent of the country's total exports. In addition, 68 333 kilos of salmon were caught.

Fishing quotas 2017-2018

Ton
Cod 257 572
Pollock 213 400
Redfish 50 800
Haddock 41 390
Herring 38 712
Long 8 598
catfish 8 540

Energy

Iceland is rich in hydropower and geothermal energy. Geothermal energy (earth vapor) is primarily used for heating homes and greenhouses. Steam power plants are located in Svartsengi near Reykjavķk, Krafla, Bjarnarflag near Mżvatn, and Hellisheiši and Nesjavellir near Žingvellir.

In 2014, geothermal energy accounted for 69 per cent of consumption, hydropower for 18 per cent and oil and gas for 13 per cent. Electricity consumption quadrupled between 1993 and 2014, an increase from 4357 GWh to 17 175 GWh. Car traffic accounted for 43 per cent of oil consumption in 2014, or 285,000 tonnes. Air traffic consumed 190,000 tonnes and the fishing fleet 140,000 tonnes.

Industry

The industry is closely linked to the domestic raw materials, and the most important branch is the fish processing industry with freezer and fillet factories, and fish oil and fish meal factories. The industry accounts for 9.7 per cent of GDP in 2015.

After the fishing industry, production of aluminum, ferro alloys and diatomaceous earth is most important. There are also shipyards, machine factories, electrical industry, building and furniture industry, textile industry, food and beverage industry and more. Since the mid-1990s, Iceland has developed to a greater extent the service industries and the industrial sector. The country has in recent years focused on developing the IT industry, biotechnology, the financial sector and tourism. In 2014, NOK 37.6 billion was spent on research and development, of which 57 per cent was spent on business development, 35 per cent on higher education and 8 per cent on public administration and non-profit organizations.

Tourism

The focus on tourism has led the industry to grow at an almost explosive rate, and the largest groups come from France, the UK, Germany and the USA. In 2014, the total number of overnight stays was 5.5 million and 1,369 million passengers were at Keflavik Airport. In 2016, 1.8 million foreign tourists visited Iceland and, for the first time, tourism was more important to the country's economy than the fishing industry. The tourist flow has also had negative effects; the large number of tourists creates congestion, lack of accommodation and toilets, labor shortages and has resulted in wild tourism where people cater.

IT

In 2014, 98 percent of all Icelanders used the Internet, preferably on a laptop or tablet. Two thirds of the population had been shopping on the internet in 2014.

Foreign Trade

Fish and food products account for approx. 70 percent of the country's total exports. Another important export product is aluminum and aluminum products. Important import goods are machinery and transport equipment, chemicals and food products. Trade takes place in particular with the USA, the UK, Germany, Denmark and Norway, while the Netherlands is the most important trading partner.

Foreign Trade

Figures in millions of Icelandic kroner 2014

Export Import
Netherlands 172 439 41 278
Germany 35 614 47 782
Great Britain 66 327 37 846
United States 29 106 63 483
France 29 365 15 688
Norway 26 525 91 767

Main export goods in 2014

Ton
Aluminum 844 721
Marine products 654,456
industrial waste 121 663
Oil and Oil Products 116 041
Ferro-silicon 112 675

Main import goods in 2014

Millions of ISK
Food and drink 394 033
Industrials 97 086
Industrials 86 590
Fuel/oil 79 919
consumer Goods 46 398

Transport and Communications

Iceland has no railways and the road network of 11 280 kilometers is of varying quality. The main road link Hringvegur around the coast was completed only in 1974 and much of the inland is still not accessible by car. A relatively large part of passenger transport takes place by air. There are a number of small airports and major airports such as Keflavķk, Reykjavķk and Akureyri. The largest airline is Icelandair, which flies both at home and abroad. The most important port city is Reykjavķk.

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