Economy (Iceland)
=================


     Overview:
         Iceland's prosperous Scandinavian-type economy is basically capitalistic,
         but with extensive welfare measures, low unemployment, and comparatively
         even distribution of income. The economy is heavily dependent on the fishing
         industry, which provides nearly 75% of export earnings. In the absence of
         other natural resources, Iceland's economy is vulnerable to changing world
         fish prices. The economic improvements resulting from climbing fish prices
         in 1990 and a noninflationary labor agreement probably will be reversed by
         tighter fish quotas and a delay in the construction of an aluminum smelting
         plant. The conservative government's economic priorities include reducing
         the budget and current account deficits, containing inflation, revising
         agricultural and fishing policies, diversifying the economy, and tying the
         krona to the EC's European currency unit in 1993. The fishing industries -
         notably the shrimp industry - are experiencing a series of bankruptcies and
         mergers. Inflation has continued to drop sharply from 20% in 1989 to about
         7.5% in 1991 and possibly 3% in 1992, while unemployment is expected to
         increase to 2.5%. GDP is expected to contract by nearly 4% in 1992.
     GDP:
         purchasing power equivalent - $4.2 billion, per capita $16,200; real growth
         rate 0.3% (1991)
     Inflation rate (consumer prices):
         7.5% (1991)
     Unemployment rate:
         1.8% (1991)
     Budget:
         revenues $1.7 billion; expenditures $1.9 billion, including capital
         expenditures of $NA million (1991 est.)
     Exports:
         $1.6 billion (f.o.b., 1991)
       commodities:
         fish and fish products, animal products, aluminum, diatomite
       partners:
         EC 67.7% (UK 25.3%, FRG 12.7%), US 9.9%, Japan 6% (1990)
     Imports:
         $1.7 billion (c.i.f., 1991)
       commodities:
         machinery and transportation equipment, petroleum, foodstuffs, textiles
       partners:
         EC 49.8% (FRG 12.4%, Denmark 8.6%, UK 8.1%), US 14.4%, Japan 5.6% (1990)
     External debt:
         $3 billion (1990)
     Industrial production:
         growth rate 1.75% (1991 est.)
     Electricity:
         1,063,000 kW capacity; 5,165 million kWh produced, 20,780 kWh per capita
         (1991)
     Industries:
         fish processing, aluminum smelting, ferro-silicon production, hydropower
     Agriculture:
         accounts for about 25% of GDP (including fishing); fishing is most important
         economic activity, contributing nearly 75% to export earnings; principal
         crops - potatoes and turnips; livestock - cattle, sheep; self-sufficient in
         crops; fish catch of about 1.4 million metric tons in 1989
     Economic aid:
         US commitments, including Ex-Im (FY70-81), $19.1 million
     Currency:
         krona (plural - kronur); 1 Icelandic krona (IKr) = 100 aurar