Iceland achieved an impressive economic record the last decade, with one of the highest consistent growth rates in the world and low inflation and unemployment. At the end of 2008, however, Iceland was in the headlines of the international press for unenviable reasons. In the wake of the global financial crisis, Iceland’s three largest private banks experienced major liquidity problems and were, within the space of a few days, taken into government administration.
The collapse of the banking sector, which was very large relative to Iceland’s economy, together with rapid depreciation of the Icelandic krona, brought about an unprecedented economic and financial crisis.
However, the foundations of the Icelandic economy remain strong and Iceland is moving towards economic recovery with multilateral assistance from the International Monetary Fund playing a key role. Iceland’s clean energy, its marine resources, strong infrastructure and well-educated workforce, provide a firm basis to overcome the current economic difficulties and implement necessary reforms.