What Is the Economy Like in Iceland?
Iceland has a prosperous mixed economy driven by tourism, fishing, and renewable energy. The country rebounded strongly from a 2008 banking crisis and now enjoys high living standards and low unemployment.
Tourism has surged to become Iceland's largest export industry, surpassing fishing in recent years. The dramatic increase in visitors since 2010 has transformed the economy, creating jobs and spurring infrastructure development. This growth also explains the high prices travelers encounter.
Fishing remains culturally and economically significant. Iceland carefully manages its marine resources through a quota system, and seafood exports generate substantial revenue. Fish processing and related industries employ a meaningful percentage of the workforce.
Renewable energy, primarily geothermal and hydroelectric, powers nearly all of Iceland's electricity needs. This clean energy attracts data centers and aluminum smelting operations looking to reduce their carbon footprints. The same geothermal resources heat homes, greenhouses, and the country's famous pools.
Iceland uses the krona (ISK) and is not part of the European Union, though it participates in the Schengen Area and European Economic Area. The cost of living is high, reflecting both the island's isolation and its strong social services.
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