June 2001
Economy slows after growth spurt
Iceland’s economy has boomed since joining the European Economic Area in 1993 brought market-based reforms. The economy has diversified, but now the government wants to rein growth in. That’s hit the stock market.
For such a small nation, Iceland's economic performance over the
past five years has been amazing. On virtually any measure - income
per capita, productivity, health, life expectancy, literacy - it
comes at or near the top of the rankings.
All this has been achieved in a remarkable turnaround since the
early 1990s. The 1970s and 1980s were not a happy time for
Icelanders. The economy was largely state-owned and managed, with
relatively high unemployment, and over-reliance on the fishing
industry. Since then the growth of alternative industries has been
marked, although fishing is still the most important source of
overseas earnings. Inflation has been brought under control, growth
has been consistently healthy and unemployment is low.
Economic alliances have been a major factor. In 1993, Iceland
became a member of the European Economic Area (EEA), giving its
exporters free access to the lucrative EU markets and ushering in a
fundamental restructuring of the...
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