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2017 OECD Economic Surveys: Iceland 2017

image of OECD Economic Surveys: Iceland 2017

Iceland is the OECD's fastest growing economy. It has made a remarkable turnaround from the crisis, helped by booming tourism, prudent economic policies and a favourable external environment. Iceland has an egalitarian society with strong trade unions, very low inequality and high gender balance. Nevertheless, as a very small open economy Iceland is prone to boom and bust cycles. Prudent fiscal and monetary policy are warranted in the current economic boom.

The spectacular growth in tourist numbers has provided new jobs, boosted tax revenues and attracted currency inflows, but there are some growing pains with social pressures emerging. Growing tourist numbers are putting pressure on the environment, infrastructure and housing. Furthermore, the strengthening króna has created difficulties for other internationally-exposed sectors.

Iceland is the most highly unionised OECD country and the wage-bargaining system has contributed to high living standards and an inclusive society. Nevertheless, recent disruptive strikes and high wage awards have intensified inflationary pressures and threaten competiveness. Fostering trust among the social partners and increasing wage coordination would make collective bargaining more effective and help sustain the benefits of the system for future generations.

SPECIAL FEATURES: SUSTAINABLE TOURISM; EFFECTIVE LABOUR RELATIONS

 

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Basic statistics of Iceland, 2015 or latest year available

(Numbers in parentheses refer to the OECD average)

This Survey is published on the responsibility of the Economic and Development Review Committee of the OECD, which is charged with the examination of the economic situation of member countries.The Economic situation and policies of Iceland were reviewed by the Committee on 29 May 2017. The draft was revised in the light of the discussion and given final approval as the agreed report of the whole Committee on 8 June 2017.The Secretariat’s draft report was prepared for the Committee by Douglas Sutherland and Urban Sila under the supervision of Patrick Lenain. Damien Azzopardi provided the statistical research assistance, and Brigitte Beyeler provided the administrative support. The Survey also benefited from contributions by Julien Daubanes, Alain Dupeyras and Jane Stacey.The previous Survey of Iceland was issued in September 2015.

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