The economy of Iceland is small and subject to high volatility. In 2013, the gross domestic product was $13.7 billion or $45 thousand per capita. Iceland has a mixed economy with high levels of free trade and government intervention.

Iceland achieved an impressive economic record in the last decade, with one of the highest consistent growth rates in the world and low inflation and unemployment. In 2008, however, three of Iceland’s largest private banks experienced major liquidity problems and were taken over by creditors or into government administration. Iceland’s financial position has been steadily improving since the crisis and the country is swiftly emerging from the recession.

  2013 2014F 2015F
GDP growth (%) 3.3 3.1 3.4
National expenditure (%) 0.1 5.2 4.8
Unemployment rate (%) 43194 3.8 3.5
Inflation (%) 43346 2.5 3.3
Exchange rate (Index) 218.9 207.4 207.5

It is very easy to establish a business in Iceland, which was listed as a top performer on the World Bank rankings of best places to start a business. Iceland minimizes red tape for international business, allowing decisions to be made and implemented quickly, with little time wasted. Iceland focuses on favorable environment for businesses in general, including low corporate tax, availability of land and efficient business environment in a European legislative framework. An Act on incentives for initial investment in Iceland has recently been adopted. Apart from certain derogations from taxes and charges, incentives can also come in the form of direct cash grants, training aid and lease of land.

 See more on doing business in Iceland here.