Iceland is a Nordic island country located in the North Atlantic Ocean. It has a population of around 364,134 people and a GDP per capita of US$58,000 as of 2019. The economy of Iceland is largely based on services which account for around 80% of GDP and employs nearly four-fifths of the population. Other important sectors include industry (13%) and agriculture (7%).
The main exports from Iceland are seafood; aluminum; machinery and equipment; ferro-alloys; animal products; pharmaceuticals; textiles and apparel. Its main trading partners are the United Kingdom (UK), Norway, Germany, the United States (US) and Denmark.
According to cheeroutdoor, the Icelandic government has taken steps to stimulate economic growth through initiatives such as tax reforms; improvement in infrastructure; encouraging foreign investment in technology-intensive industries such as maritime services or IT services; promoting tourism; improving access to credit for small businesses; increasing agricultural productivity through subsidies or special credits for rural development projects; providing technical assistance to farmers. Furthermore it has sought foreign aid from international organizations such as the European Union (EU) to help develop its economy over time. In recent years, there have been several positive developments in the Icelandic economy due to these efforts including increased foreign investment in infrastructure projects which have helped create jobs in Iceland. Additionally, Iceland’s banking sector has seen significant growth with many new banks opening up across the country offering competitive loan products for businesses looking for capital to expand their operations or invest in new projects.
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 percent of Iceland’s land is productive land, and only 0.1% is cultivated land. Agriculture accounts for 10.8 percent 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.
Abbreviated as ISL by abbreviationfinder.org, 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.
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 percent of GDP in 2018 and engages 3.9 percent 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 Reykjavík, Vestmannaeyjar, Seyðisfjörður, Raufarhöfn, Neskaupstaður, Ísafjörður and Akranes. Most of the catches are exported, and the value of these catches is about 70 percent 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 Reykjavík, Krafla, Bjarnarflag near Mývatn, and Hellisheiði and Nesjavellir near Þingvellir.
In 2014, geothermal energy accounted for 69 percent of consumption, hydropower for 18 percent and oil and gas for 13 percent. Electricity consumption quadrupled between 1993 and 2014, an increase from 4357 GWh to 17 175 GWh. Car traffic accounted for 43 percent 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 percent 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 percent was spent on business development, 35 percent on higher education and 8 percent on public administration and non-profit organizations.
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.
Note: the capital city of Iceland is Reykjavík with a population of 118 200 (2012). Other major cities include Kópavogur with a population of 31,200, Hafnarfjördur with a population of 26,500, Akureyri with a population of 17,900 (2012).
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.
- COUNTRYAAH: Find major trading partners of Iceland, including major exports and major imports with latest trade value and market share as well as growth rate.
Figures in millions of Icelandic kroner 2014
|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
|industrial waste||121 663|
|Oil and Oil Products||116 041|
Main import goods in 2014
|Millions of ISK|
|Food and drink||394 033|
|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 Keflavík, Reykjavík and Akureyri. The largest airline is Icelandair, which flies both at home and abroad. The most important port city is Reykjavík.