Iceland's economy depends heavily on the fishing industry, which provides 40% of export earnings, more than 12% of GDP, and employs nearly 5% of the work force. It can be affected by declining fish stocks as well as by fluctuations in world prices for its main exports. In addition to fish and fish products, Iceland exports aluminum and ferrosilicon. More recently Iceland's economy has been diversifying into manufacturing and service industries. Abundant geothermal and hydropower sources have attracted substantial foreign investment.

Capitalism and free-market principles combine with an extensive welfare system.

Much of Iceland's economic growth in recent years came from the rapid expansion of the country's financial sector.  Following the privatisation of the banking sector in the early 2000s consumers and businesses borrowed heavily in foreign currencies. Worsening global financial conditions from 2008 resulted in a sharp depreciation in the value of the krónur. Foreign loans and other foreign assets in Icelandic banks totalled more than 10 times the country's GDP, becoming unsustainable. Iceland's three largest banks collapsed in late 2008. Iceland owes British and Netherlands authorities approximately $5.5 billion for compensating British and Dutch citizens who lost deposits in the failed Icelandic banks.

Key facts
*  Currency: Icelandic krónur (£1= 187 isk, 1€=156 isk, March 2014)
*  GDP per capita: 29,560€  (end 2013 estimate)
*  Unemployment rate:  4.5%  (end 2013)
*  Inflation:  3.9%  (end 2013)
*  Natural resources: fish, hydropower, geothermal power

Industries and exports
*  Fish processing; aluminum smelting, ferrosilicon production; geothermal power, hydropower, tourism.
Industrial production growth rate: -1% (2013 est.)
*  Exports: fish and fish products 40%, aluminum, animal products, ferrosilicon, diatomite
*  Leading export markets:  Netherlands 30%, Germany 12.9%, UK 9.8%, Norway 5.1%, US 4.5%, France 4.4% (data from 2012)

Energy
Electricity - % of total installed capacity (2010 data):
   - from hydroelectric plants: 73%
   - from other renewable sources: 22.3%
   - from fossil fuels: 4.7%
   - from nuclear fuels: 0%