Iceland is the fifth most productive country in the world based on GDP per capita at purchasing power parity. It is also ranked second on the 2005 United Nations Human Development Index. The economy historically depended heavily on the fishing industry, which still provides almost 40% of export earnings and employs 8% of the work force. In the absence of other natural resources (except for abundant hydro-electric and geothermal power), Iceland’s economy is vulnerable to changing world fish prices. The economy remains sensitive to declining fish stocks as well as to drops in world prices for its main material exports: fish and fish products, aluminium, and ferrosilicon. Although the Icelandic economy still relies heavily on fishing it is constantly becoming less important as the travel industry and other service, technology, energy intensive and various other industries grow.

The centre-right government plans to continue its policies of reducing the budget and current account deficits, limiting foreign borrowing, containing inflation, revising agricultural and fishing policies, diversifying the economy, and privatising state-owned industries. The government remains opposed to EU membership, primarily because of Icelanders’ concern about losing control over their fishing resources.

Iceland’s economy has been diversifying into manufacturing and service industries in the last decade, and new developments in software production, biotechnology, and financial services are taking place. The tourism sector is also expanding, with the recent trends in ecotourism and whale-watching. Growth slowed between 2000 and 2002, but the economy expanded by 4.3% in 2003 and grew by 6.2% in 2004. The unemployment rate of 1.8% (third quarter of 2005) is among the lowest in the European Economic Area. Over 99% of the country’s electricity is produced from hydropower and geothermal energy.

Iceland’s agriculture industry consists mainly of potatoes, turnips, green vegetables (in greenhouses), mutton, dairy products and fish. Some are examining the possibility of introducing other crops from South America, where the potato is native. Given that summers in Iceland are not hot enough to produce some other types of food, those plants that are from the same ecological range as the potato (those from a similar climate to Iceland), may very probably be adaptable to Iceland. Those of interest include the quinoa, a pseudocereal; beach strawberry, a fruit ; calafate, a fruit; and the Monkey-puzzle araucaria, a tree that produces edible nuts. Those crops would help the country to reduce imports of food like cereals, fruits, and nuts.

Iceland’s stock market, the Iceland Stock Exchange (ISE), was established in 1985. Borgartún is the name of the financial center in Reykjavik, hosting a large number of companies and three investment banks. The primary currency of Iceland is the Icelandic Króna (ISK).