Economics and business
For many years, fishing and fishery products have been the basis of Iceland’s economy; until 2000, the fisheries industry accounted for about 75 percent of the country’s export revenue. Nowadays fishing’s share of exports has dropped to 40 percent, while aluminum production has become increasingly important. Thanks to the large availability of cheap energy, the country has increasingly developed into Europe’s aluminum center. Other expansive industries include computer technology and genetic engineering. The service and service sector has also grown strongly during the 1990s; among other things, in the late 1990s, Icelandic financial institutions and venture capitalists bought companies in bands such as the UK, Denmark, Sweden and the USA.
During the 2008 international financial crisis, the country was hit hard, and several major banks faced financial problems. The financial crisis led to the country applying for membership in the EU in 2010, an application which was withdrawn in 2014.
Agriculture is mainly focused on animal husbandry, which is partly because the cool climate makes it difficult to grow grain. Only about 1 percent of Iceland’s land area is cultivated. The cultivated area is almost entirely occupied by mowing grounds and forage plants, which are used as winter feed. In addition, potatoes are grown. In recent years, the production of vegetables (tomatoes and cucumbers) and southern fruits (oranges, bananas and grapes) has increased significantly, thanks to greenhouses heated by hot springs.
About 1/4 of the land area is usable land. Agriculture, along with fishing and forestry, employs about 6 percent of the workforce and accounts for 6 percent of GDP. Large areas are utilized as natural pasture. The most important livestock are sheep, horses and cattle, and the country is largely self-sufficient in milk and meat. Exports of Icelandic horses are an important industry.
The deep and nutritious sea around Iceland lies in the border area between hot and cold currents and thus provides good conditions for fishing. Fishing accounts for almost 40 percent of export value. Cod is the economically most important fish, but also haddock, Acadian kingfish (Sebastes fasciatus), grayling, halibut, herring, capelin and shrimp are of great economic importance. Annual catches increased significantly during the 1990s, culminating in 1997 with 2.2 million tonnes. Since 2002, catches have gradually decreased; In 2010, 1 million tonnes were caught, while 5,000 tonnes were grown.
To secure its economy and raw material base, in 1972 Iceland extended the fishing limit from 12 to 50 nautical miles and 1975 to 200 nautical miles. The enlargement led to conflicts with Britain, especially in 1975 during the so-called cod war (see fishing war). In 1983, the country introduced catch limits, so-called quotas, to ensure future fishing industry. The system has had the desired effect but has also meant a restructuring to larger units.
Iceland has one of the world’s most modern fishing fleets, which in 2011 included 1,600 fishing vessels totaling 160,000 gross tonnes. Reykjavik, Vestmannaeyjar, Neskaupstaður, Seyðisfjörður, Raufarhöfn, Ísafjörður and Akranes are among the most important fishing ports. International criticism has been directed at Icelandic whaling.
Raw material resources and energy supply
Iceland lacks valuable mineral resources. Production of industrial minerals includes cement, natural gravel and crushed gravel, sand, pumice, salt and scoria. Aluminum and silicon iron are extracted from imported raw materials by utilizing cheap geothermal energy and water energy. Iceland accounts for 2 percent of the world’s aluminum production and 1.5 percent of silicon iron production (2009). Until 2005, diarrhea was recovered on Lake Mývatn in the northern part of the country. The majority of raw material production is state-owned.
Energy consumption in Iceland is among the highest in the world per capita. This is due to a large number of energy-intensive industries, an energy-intensive fishing fleet, extensive transport and heating of housing in a cold climate. However, energy resources in the form of water energy and geothermal energy (geothermal heat) are significant. Of the primary energy supply, domestic production of geothermal energy and water energy accounts for 65 and 20 percent (2009). Remaining needs are mainly covered by oil imports, just under 20%, and by coal. Of the final use, the industry accounts for just under 50 percent, transport for 10 percent and household heating for just under 20 percent.
The power plants are located in the southwest, and among the largest electricity consumers are energy-intensive industries. Geothermal energy is mainly used for heating homes and greenhouses, but attempts have also been made to convert geothermal energy into electricity. Geothermal power plants are located in Svartsengi near Reykjavík and at Mývatn (Krafla, Bjarnarflag). Nuclear energy is lacking in Iceland.
Iceland’s industry is diverse and employs almost 1/4 of the employed. The most important individual industry is the aluminum industry. The country has three aluminum smelters, of which the newest and largest at Eskifjörður reached full capacity in 2008.
In addition to these large capital and energy-intensive industries, there are a large number of smaller companies, divided into many manufacturing branches. These include mainly the fish processing industry with freezer series, fillet factories, fish oil and fishmeal production and fish canning industries. In addition, a number of industries related to fishing, such as shipyards and companies that manufacture fishing gear and packaging materials. Other industries include food, machinery and textile industries, as well as the electrical and graphic industries.
Iceland also has several successful companies in the biotechnology and pharmacology industries. One such company is the gene research company deCode Genetics Inc., which, after a few turbulent years in the early 2010s, was purchased by Chinese company WuXi PharmaTech in 2015.
For many years, fish and fishery products have dominated Iceland’s exports, but since 2008, aluminum accounts for almost as much of exports as the fishing industry; In 2011, the fishing industry accounted for 40 percent and aluminum production for 37 percent. According to Countryaah, imports are dominated by machinery and transport, industrial raw materials, oil and oil products and food. Among individual markets for exports, the Netherlands, Spain and the UK are the most important, while imports come mainly from Germany, Norway and China.
Tourism and gastronomy
In relation to the size of its own population, foreign tourism is relatively extensive with just over 1 million foreign visitors per year. Most visitors come from Germany, the United Kingdom, France, Denmark and Sweden.
It is mainly the Icelandic nature with geysers, glaciers, waterfalls and lots of active volcanoes that attract tourists. On the south coast you can travel across the plains of Europe’s largest glacier, Vatnajökull. The volcanically active areas include Hekla, Heimaey, Askja and Krafla.
Horseback riding, rock climbing and bird watching are other activities offered to an island visitor. The country’s main attractions include the 1,000-year-old Thingvellir district, about 40 km northeast of Reykjavík.
The diet of Icelanders is dictated by the island’s geographical location in the North Atlantic. Fish plays a completely dominant role in Icelandic cuisine, followed by mutton and lamb. Vegetable cultivation is almost non-existent, which is why frozen, expensive import goods are common. If you are interested in traditional dishes, you can order cooked, cooked, boiled lamb skull, or shark, shark dug down to rot for up to six months. Other eating habits that reflect the need to preserve food for a long time are hard fish stew, air-dried haddock that is cut into strips and eaten with or without butter, or blood butter, kidney alga pudding with sheep blood packed in the stomach. Christmas dishes are made of plaice, ripen in milk sauce, and flatbreads, unleavened flat bread.