Iceland Economic Snapshot

Economic Forecast Summary (May 2021)

GDP is projected to grow by 2.8% in 2021 and 4.7% in 2022, driven by a rebound of foreign tourism and strong fisheries and services exports. Household consumption will rise as precautionary savings are reduced and confidence strengthens. Business investment will grow supported by improved financial conditions and the realisation of pent-up demand for infrastructure.


Reform Priorities (April 2021)

Going for Growth 2021 - Iceland

The pandemic-related collapse of foreign tourism and international travel, which account for almost a fifth of GDP, highlighted the need to diversify the economy. Iceland needs to improve resilience and find new drivers of productivity and employment growth, in particular given the objective of emission reductions. Boosting skills across the population is hence the top priority, along with reforms to strengthen competitive forces.

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2021 Structural Reform Priorities

  • Education and skills: Foster strong and relevant skills
  • Environmental policy: Move towards a low-carbon economy
  • Agriculture: Reduce agricultural support
  • Competition and regulation: Remove barriers to domestic and foreign entry
  • Tax system: Lower the marginal tax wedge


>> Going for Growth homepage

16 September 2019 - Economic Survey of Iceland

Iceland’s slowdown underlines the need to fix structural issues
Sound macroeconomic policies and favourable external conditions have enabled Iceland’s economy to emerge stronger from a decade of post-crisis management. Yet the impact on growth from a drop in tourist arrivals and seafood exports underlines the need for reforms to open up and diversify the economy and improve its resiliency to sectoral shocks.