The economy of Iceland is small and subject to high volatility. In 2011, gross domestic product was US$12.3bn, or $38,000 per capita, based on purchasing power parity (PPP) estimates. The financial crisis of 2007–2010 produced a decline in GDP and employment, although the magnitude of this decline remains to be determined.
Iceland has a mixed economy with high levels of free trade and government intervention. However, government consumption is less than in other Nordic countries.
In the 1990s Iceland undertook extensive free market reforms, which initially produced strong economic growth. As a result, Iceland was rated as having one of the world's highest levels of economic freedom as well as civil freedoms. In 2007, Iceland topped the list of nations ranked by Human Development Index and was one of the most egalitarian, according to the calculation provided by the Gini coefficient.
From 2006 onwards, the economy faced problems of growing inflation and current account deficits. Partly in response, and partly as a result of earlier reforms, the financial system expanded rapidly before collapsing entirely in a sweeping financial crisis. Iceland had to obtain emergency funding from the International Monetary Fund and a range of European countries in November 2008.
Read more about Economy Of Iceland: Geography and Resources, External Trade, Economic Agreements and Policies, Currency and Monetary Policy, Growth
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“Even the poor student studies and is taught only political economy, while that economy of living which is synonymous with philosophy is not even sincerely professed in our colleges. The consequence is, that while he is reading Adam Smith, Ricardo, and Say, he runs his father in debt irretrievably.”
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“Even the poor student studies and is taught only political economy, while that economy of living which is synonymous with philosophy is not even sincerely professed in our colleges. The consequence is, that while he is reading Adam Smith, Ricardo, and Say, he runs his father in debt irretrievably.”
—Henry David Thoreau (1817–1862)