Foreword This year, Iceland celebrates its centennial anniversary as a free and sovereign state. In 1918, Iceland was among the poorest states in Western Europe, with a GDP per capita equivalent to today’s low-income countries. In 100 years it has increased by 1700%. As a result, today’s Iceland is a high-income, matured and modern economy, which is covered in this report. Iceland also commemorates another milestone this year, as 10 years have passed since we faced the deepest financial crisis the country has ever seen. The transformation of the economy over the past decade has obviously not been as dramatic as over the last century but the results are nevertheless impressive. Iceland is currently on track to its 8th consecutive year of strong economic growth, annual unemployment rate has remained below 3% for three years and Iceland is a net lender to the rest of the world. In the aftermath of the financial crisis a lack of holistic overview of the Icelandic economy sparked off this report, now published for the 21st time. Now, The Iceland Chamber of Commerce (ICoC) publishes The Icelandic Economy report annually. Despite some structural changes to the report and a different focus each year, the aim has always been the same; to provide an objective overview of the current economic, business and political landscape in Iceland, recent events and developments, and future economic prospects. There are three sections in this report. The first section primarily provides a broad overview of Iceland’s current economic landscape. The second section gives an overview of the political landscape and then dives into more details of the main sectors of the economy as well the most recent developments. The categorisation used for the different sectors; financial, domestic, international and resource sector, is based on McKinsey & Company’s report from 2012, “Charting a Growth Path for Iceland”, whose publication was a guiding light in the restoration of the Icelandic economy after the financial crisis. Lastly, the third section reflects on future scenarios, long-term growth prospects and the so-called four focus lenses, which ICoC will operate under in the coming years. In addition, outlook for infrastructure, a key ingredient for further prosperity, is covered. Our hope is that this report will provide valuable insight into the Icelandic economy and the state of its current affairs.
Ásta S. Fjeldsted Managing Director Iceland Chamber of Commerce