Political and economic situation
The small size of the Icelandic economy is important to keep in mind when providing an overview of the Icelandic economy. In 2020, the Icelandic economy was stable but with some challenges related to the rapid growth of the tourism sector. To put the increased tourism in perspective, it may be noted that the number of tourists rose from 566.000 in the year 2011 to 2.225.000 six years later (Ferðamálastofa - Icelandic Tourist Board). Traditionally, GDP growth is comparatively high and the same goes for GDP volume per capita, traditionally well above the EU28. By the same token, unemployment rates have traditionally been low (even as low as under 2%) and employment rates high.
This stability has been significantly challenged by the corona-crisis with Gross Domestic Product (GDP) estimated to have decreased by 10.4% in volume in the third quarter of 2020 compared with the same quarter of 2019. Iceland’s overall registered unemployment rate in October 2020 measured at 11.1%, (Vinnumálastofnun - The Directorate of Labour, 2020)