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.
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.
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
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
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
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.
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
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.
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.
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.
Figures in millions of Icelandic kroner 2014
Main export goods in 2014
|Oil and Oil Products
Main import goods in 2014
||Millions of ISK
|Food and drink
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.