PESTLE Insights: Iceland – Macroeconomic Outlook Report

Greater Reykjavik area, which comprises cities of Reykjavik, Kópavogur and Hafnarfjörður, generates 59% of the Iceland’s GDP and comprises 64.1% of the country’s population


Financial intermediation, real estate and business activities contributed majorly (24.8%) to the GVA in 2017, followed by mining, manufacturing and utilities (17.3%) and wholesale and retail trade (12.7%). All the three sectors are forecasted to grow by 6.1%, 6.6% and 6.55, respectively, in 2018.


– Iceland has an excellent air connectivity with other parts of the world. It takes 2.5-3 hrs to Europe and 5-7 hrs to North America on an average

– Sharp rise in tourist inflows in Iceland is putting pressures on infrastructure of the country. Number of infrastructure projects for development of roads, train, airport and social infrastructure has been envisaged by the government which creates opportunity for private players over next decade. Tender for these projects is expected within next few years (2019-2022)

– OMXIPI includes all shares listed on OMX Nordic Exchange Iceland. Declining trend of the OMXIPI index over the last one year exhibits marginal slowdown of economy.

Reasons to buy

- Macroeconomic Outlook Report identifies the potentials of the country as an investment destination by analyzing the political, economic, social, technological, legal and environmental (PESTLE) structure.

- PESTLE Insights provides 360 degree view of the economy which can be used as a strategic tool to understand the market dynamics, business potentials and direction of operations

- Along with providing the country’s snapshot, the report captures the risk factors pertaining to the macroeconomic risks, political environment, legal environment, demographic and social structure effectiveness, technology & infrastructure and natural and geographic aspects that might impact business.

- This report also highlights key clusters/cities which contribute significantly to the country GDP and population along with major companies’ presence in these areas.

Companies mentioned




Air Iceland

Table of Contents

Table of Contents 2

List of Exhibits 3

Did You Know? 4

Country Highlights 5

Country Snapshot 7

PESTLE Insights 21

Political Landscape 22

Economic Landscape 23

Social Landscape 30

Technological Landscape 33

Legal Landscape 36

Environmental Landscape 37

Outlook 38

List of Figures

List Of Figures

Exhibit 1: Iceland ’s Performance in terms of the Country Risk Analysis in Comparison to West European Nations and The World 11

Exhibit 2: Performance Overview (Score: 1-100) 11

Exhibit 3: Broad Categories and Weights Behind the Index 12

Exhibit 4: OMXIPI Stock Index 14

Exhibit 5: Key Sectors Contribution to the Economy 15

Exhibit 6: Net FDI and FDI by Origin, 20102016 16

EXHIBIT 7: FDI flows by Sector (US$ Mn), 20132016 18

Exhibit 8: Key Infrastructure Indicators 20

Exhibit 9: Real GDP and Household Consumption Growth Rate 24

Exhibit 10: Real GDP Growth Rate Comparison, 2017 24

Exhibit 11: Exports, Imports and Trade Balance 25

Exhibit 12: Current Account Balance 25

Exhibit 13: Top Three Commodity Exports, % of Total Exports, 20142017 26

Exhibit 14: Aluminum and Articles Thereof, % of World Total, 2017 26

Exhibit 15: Interest Rates 28

Exhibit 16: Exchange Rate 28

Exhibit 17: Public Finance 29

Exhibit 18: General Government Debt 29

Exhibit 19: Employment/Unemployment, 20132020f 31

Exhibit 20: Average Annual Wages (ISK) 31

Exhibit 21: Labor Cost Index, 20132020f 31

Exhibit 22: Rural/Urban Share of Total Population 32

Exhibit 23: Age-group Wise Share of Total Population 32

Exhibit 24: Gender-wise Share of Total Population 32

Exhibit 25: Number of Patents Granted Per Million Inhabitants, 2015 34

Exhibit 26: Gross Domestic Expenditure on R&D by Sector (% of GDP), 2016 34

Exhibit 27: Internet Users % of Total Population, Mobile and Broadband Penetration Rate, 2016 35

Exhibit 28: Doing Business in Iceland 2018 36

Exhibit 29: Corruption Perception Index (Rankings) 2017 36

Exhibit 30: CO2 Emissions 37


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