IcelandChapters
Settled by Norwegian and Celtic (Scottish and Irish) immigrants during the late 9th and 10th centuries A.D., Iceland boasts the world's oldest functioning legislative assembly, the Althingi, established in 930. Independent for over 300 years, Iceland was subsequently ruled by Norway and Denmark. Fallout from the Askja volcano of 1875 devastated the Icelandic economy and caused widespread famine. Over the next quarter century, 20% of the island's population emigrated, mostly to Canada and the US. Denmark granted limited home rule in 1874 and complete independence in 1944. The second half of the 20th century saw substantial economic growth driven primarily by the fishing industry. The economy diversified greatly after the country joined the European Economic Area in 1994, but Iceland was especially hard hit by the global financial crisis in the years following 2008. The economy is now on an upward trajectory, fueled primarily by a tourism and construction boom. Literacy, longevity, and social cohesion are first rate by world standards.
Source: The CIA World Factbook - Iceland
Key indicators
- Area
- 103,000 km2
- Population
- 354,234 (July 2021 est.)
- Government type
- unitary parliamentary republic
- Languages
- Icelandic, English, Nordic languages, German
- GDP
- $21.715 billion (2020 est.)
- Growth rate
- -6.6% (2020 est.)
- HDI
- 4
- Capital
- Reykjavik
Macroeconomic indicators
After expanding strongly in recent years, the economy is projected to gradually approach its potential growth rate. Household consumption will remain robust on the back of strong wages and continuing immigration. Business investment is set to start rising after its recent slump, while residential investment will decelerate. The growth of manufacturing exports will slow as competitiveness declines, while tourism demand will remain strong.
Inflation is picking up. The central bank is projected to raise interest rates to contain price increases. Although a budget surplus is planned for 2018, fiscal policy should be more prudent than projected since the economy still runs way above its potential. Public spending in particular should grow less. A more vigorous competition policy would improve the business climate and spur productivity.
Source: OECD - Economic Forecast
IMF Statistics:
| Subject descriptor | 2018 | 2019 | 2020 | 2021 | 2022 |
|---|---|---|---|---|---|
|
Gross domestic product, constant prices Percent change |
4.821 |
0.822 |
1.631 |
2.048 |
2.035 |
|
Gross domestic product, current prices Percent change (Billions) |
25.965 |
23.918 |
24.237 |
24.744 |
25.268 |
|
Gross domestic product per capita, current prices Percent change (Units) |
74,515.472 |
67,037.340 |
66,601.877 |
66,799.307 |
67,088.523 |
|
Inflation, average consumer prices Percent change |
2.683 |
2.806 |
2.527 |
2.500 |
2.500 |
|
Volume of imports of goods and services Percent change |
0.847 |
-5.139 |
2.759 |
0.404 |
1.877 |
|
Volume of exports of goods and services Percent change |
1.678 |
-2.193 |
-0.053 |
1.431 |
1.429 |
|
Unemployment rate Percent change |
2.742 |
3.300 |
3.600 |
3.750 |
3.750 |
|
Current account balance Percent change (Billions) |
0.730 |
0.753 |
0.393 |
0.308 |
0.174 |
|
Current account balance Percent change |
2.813 |
3.148 |
1.623 |
1.244 |
0.689 |
Estimates
Source: IMF Statistics - Iceland
Relationships with Luxembourg
Existing conventions and agreements
Non double taxation agreement
In order to promote international economic and financial relations in the interest of the Grand Duchy of Luxembourg, the Luxembourg government negotiates bilateral agreements for the avoidance of double taxation and prevent fiscal evasion with respect to Taxes on Income and on fortune with third countries.
- Convention from 04.10.1999 (Memorial 2001, A No.96 , p.1907)
- Effective as of 01.01.2002 (Memorial 2001, A No.96 , p.1907)
- Amendment of the Convention from 28.08.2009 (Memorial 2010, A No.51, p.830)
- Effective as of 01.01.2011 (Memorial 2010, A No.51, p.830)
Air Services agreement
- Agreement from 10.23.1952 (Memorial 1953, p. 735)
- Effective as of 29.09.1953 (Memorial 1953, p. 1330)
Further information
Foreign Trade
The Statec Foreign Trade statistics provide information on the trade of goods - by product and by country. This information is collected respectively through the INTRASTAT declaration and on the basis of customs documents.
You can see the statistics on the website of the Statec.
Contact points in Iceland
Embassy of the Grand Duchy of Luxembourg in Iceland
Ambassador with residence in London: Mr Jean OLINGER
27, Wilton Crescent
GB-London SWIX 8SD
United Kingdom
Tel.: (+44 20) 7235 69 61/62/63
Fax: (+44 20) 7235 97 34
E-Mail: londres.amb@mae.etat.lu
Honorary Consul
Honorary Consul with jurisdiction over Iceland:
Mr Bjarni MARKUSSON
c/o Chairman of the Board,
Grofin 1, 3rd floor
IS-101 Reykjavik
Iceland
Tel.: (+354) 414 6802
E-Mail: bjarnimark@simnet.is
Source: Ministry of Foreign Affairs of Luxembourg
Country risk as defined by Office du Ducroire for Iceland
Ducroire is the only credit insurer covering open account deals in over 200 countries. A rating on a scale from 1 to 7 shows the intensity of the political risk. Category 1 comprises countries with the lowest political risk and category 7 countries with the highest. Macroeconomics experts also assess the repayment climate for all buyers in a country.
Link: Ducroire Office - Country Risk for Iceland