Iceland Overview

After the economic crisis in 2002, The Icelandic economy has recovered a certain dynamism since 2003. The GDP growth rate was 5.2% in 2004 and 5.8% in 2005. The IMF forecasts a 4.9% growth rate in 2006.

This growth is carried by households consumption and by strong investment levels. For instance, the country has set up its history's most important investment programme, in order to raise aluminium production by 120% by the year 2008. Inflation is important and reaches an estimated 3.9% in 2005.

The agriculture sector employs 4% of the Icelandic active population and is mainly dominated by breeding. Fishing is the first economic primary resource, it accounts for 13% of the GDP and employs 10% of the active population. Iceland has strongly developed activities using its geothermal and hydroelectric energy resources. The industrial sector generates 29% of the GDP. Manufacturing industry works on a small scale. In the mid-term, energy and renewable energy, biomedical research, tourism and pharmaceutical industry sectors have the strongest development potential.

The Icelandic economy is characterized by its opening up to imports and exports. Almost half of the exports are fishing products.

Its three main export countries are United Kingdom, Germany and the Netherlands. Iceland's three main import countries are Germany, Denmark and the United States. Except fishing, energy and some agriculture products, Iceland imports everything, especially machinery, IT products and hydrocarbons.