Are you looking to do business with companies in Iceland? Our country profile on Iceland includes important data that’s beneficial to know if you plan on doing business in Iceland.
Iceland has a free market economy with relatively low taxes compared to other OECD countries, while maintaining a Nordic welfare system providing universal health care and high education for its citizens, according to an OECD report. In recent years, Iceland has been one of the wealthiest and most developed nations in the world. In 2011, it was ranked as the 14th most developed country in the world by the United Nations’ Human Development Index, and the fourth most productive country per capita. The country has a population of about 320,000; with the capital and the largest city being Reykjavik. The surrounding areas in the southwestern region of the country are home to two-thirds of the country’s population.
Iceland has a mixed economy with high levels of free trade and government intervention. However, government consumption is less than in other Nordic countries. Iceland’s economy is highly export-driven. Marine products account for the majority of goods exports. Other important exports include aluminum, ferro-silicon alloys, machinery and electronic equipment for the fishing industry, software, woolen goods. Most of Iceland’s exports go to the European Union, the United States, and Japan. Iceland’s economy has been diversifying into manufacturing and service industries in the last decade, including software production, biotechnology, and financial services. Despite the decision to resume commercial whale hunting in 2006, the tourism sector is expanding, with the recent trends in eco-tourism and whale-watching. Iceland’s agriculture industry consists mainly of potatoes, green vegetables, mutton and dairy products, according to the CIA World Factbook. Iceland ranked 5th in the Index of Economic Freedom 2006 and 14th in 2008. Iceland has a flat tax system. The corporate tax rate is a flat 18%, one of the lowest in the world.
Iceland has been hit especially hard by the ongoing global financial crises, because of the failure of its banking system and a subsequent economic crisis. Before the crash of the three largest banks in Iceland, their combined debt exceeded approximately six times the nation’s gross domestic product of $14 billion, as estimated by the IMF in 2011. There is even speculation that Iceland is now entering an economic depression, making it the first economy of the developed world to plunge into depression due to the global recession of 2008. Although Iceland’s economy grew 3.3% during the last quarter of 2009, the overall contraction in GDP over 2009 was 6.5%, less than the 10% originally predicted by the IMF. But it seems that the Icelandic government has taken decisive actions, in order to get Iceland back on the path of growth. The main source of economic problems, the Icelandic banking system, has been completely overhauled in the wake of its collapse in 2008. The Icelandic economy has been further helped, by the Icelandic government’s insistence on staying away from the path of protectionism.
Is it worth it to do business in Iceland?
Overall, Iceland is a decent market to do business in. While their are some serious economic issues that still have to solved, it seems that the Icelandic government is doing its best to move on from the crises. In fact the World Bank, ranked Iceland in 9th place for 2012, in its annual Ease of Doing Business Index. In the same Index, Iceland was ranked in 3rd place for Enforcing Contracts, 81st for Trading Across Borders, and 46th place for Protecting Investors. So clearly Iceland is a very business friendly environment in comparison to other countries. While the market may be small, with less than half a million people, it is certainly one of the richest in the world. With a GDP per capita of approximately, $43,226, the average Icelandic citizen has one of the highest standards of living on Earth. As a result, you have a market that is quite open to consumption. To find out more about various countries around the world, please join us on Globial.com.