celand has been experiencing a tourism boom. The number of tourists visiting annually quadrupled between 2010 and 2016 and shows continued strength. The tourism sector is now the major export earner and is also creating new jobs and supporting new businesses.
Iceland is the OECD’s smallest economy and,currently,the fastest growing. A booming financial services and construction led to a deep financial crisis in 2008. However, Iceland has made a remarkable turnaround, helped by spectacular growth of tourism, prudent economic policies and a favourable external environment.
Iceland is the OECD's fastest growing economy. It has made a remarkable turnaround from the crisis, helped by booming tourism, prudent economic policies and a favourable external environment. Iceland has an egalitarian society with strong trade unions, very low inequality and high gender balance. Nevertheless, as a very small open economy Iceland is prone to boom and bust cycles. Prudent fiscal and monetary policy are warranted in the current economic boom.
The spectacular growth in tourist numbers has provided new jobs, boosted tax revenues and attracted currency inflows, but there are some growing pains with social pressures emerging. Growing tourist numbers are putting pressure on the environment, infrastructure and housing. Furthermore, the strengthening króna has created difficulties for other internationally-exposed sectors.
Iceland is the most highly unionised OECD country and the wage-bargaining system has contributed to high living standards and an inclusive society. Nevertheless, recent disruptive strikes and high wage awards have intensified inflationary pressures and threaten competiveness. Fostering trust among the social partners and increasing wage coordination would make collective bargaining more effective and help sustain the benefits of the system for future generations.
SPECIAL FEATURES: SUSTAINABLE TOURISM; EFFECTIVE LABOUR RELATIONS
The latest OECD Economic Survey of Iceland, to be published on Tuesday 27 June, analyses the factors behind the country’s remarkable economic turnaround as well as steps that can be taken to preserve sustainable and inclusive growth.
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This country note from Going for Growth 2017 for Iceland identifies and assesses progress made on key reforms to boost long-term growth, improve competitiveness and productivity and create jobs.
Iceland has steadily recovered from the global financial crisis, with economic activity above pre-crisis levels and a number of other visible signs of normalisation, including falling unemployment, improved public finances and stronger household finances.
English, PDF, 97kb
This country note from Going for Growth 2015 for Iceland identifies and assesses progress made on key reforms to boost long-term growth, improve competitiveness and productivity and create jobs.
In his speech to OECD Ambassadors, the President of Iceland discussed how Iceland could offer lessons on the nature of a clean energy economy; and presented some insights from Iceland's recent challenges in dealing with the financial crisis.
Country Notes from OECD Economic Policy Reforms: Going for growth 2011 presenting OECD recommendations for structural reform priorities for individual countries.
Provided that Iceland is able to negotiate to maintain the authority to set TACs and to keep the ITQ system, joining the EU, and hence the Common Fisheries Policy (CFP), should not reduce the efficiency of the Icelandic fisheries management system.