Isländischer Außenwirtschaftsrat

Economy of Iceland
The facts and figures behind the financial growth

The growth driven Icelandic economy, high living standards and large investments abroad by Icelandic companies has generated great interest. How can a nation of only 300,000 persons enjoy one of the highest GDP per capita in the world and rank number one in Europe for competitiveness according to IMD's World Competitiveness Yearbook 2005? Icelandic companies, grown out of a labour market of 170,000 people, now employ over 100,000 people in 14 countries worldwide. In a world, where pension systems are a growing problem, Icelanders are one of OECD's youngest nations with fast growing pension funds, the assets of which have now reached around 120% of the nations total GDP and growing.

The Confederation of Danish Industries decided to find out and at its Annual Conference in 2005, the Icelandic economy was represented under the headline “Meet the winners”. This publication outlines the Icelandic case seen from their point of view.

Recent media attention has been focusing on structural imbalances and negative aspects of such rapid growth, heavy FDI and expansion abroad. These effects have long been monitored by the Central bank of Iceland and most were indeed expected and forecast three years ago by the ministry of finance in a report on the macro-economic impact of the construction of power plants and aluminium smelters.

In a new report, following the negative attention, JP Morgan's analysts comment: “We are pushed to think of an occasion when such a small sector of the credit market has attracted so much attention. […]The volatility has been exacerbated by broker comments from some of the Icelanders’ direct competitors questioning, unsurprisingly, their economic viability.” They add later in the report: “So to us, as financial analysts, while the economy does look overdue for a correction, outside sources are not predicting a deep recession.”

Following is a list of sources on the Icelandic economy and financial sector:

Central Bank of Iceland: The Economy of Iceland 2005

Central Bank of Iceland: Financial Stability 2005

Central Bank of Iceland: Economic Indicators, February 2006

Ministry of Finance: Economic Forecast for 2005-2007

Iceland Stock Exchange: Snapshot

Kaupthing Bank: The Icelandic Economy – Investing in Iceland

Ministry of Finance: Weekly Web Release, March 23 2006

Iceland Review Daily News: Interview with Iceland's Prime Minister Mr. Halldór Ásgrímsson

Central Bank of Iceland: Interview with Chairman of the Board of Governors, Mr. David Oddsson

Iceland Review Daily News: Fitch confirms the rating of Icelandic banks and that the outlook is stable

Central Bank of Iceland: Standard & Poor's affirms Iceland's sovereign rating and unchanged outlook