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Iceland's Scandinavian-type economy is basically capitalistic, yet with an extensive welfare? system, low unemployment, and remarkably even distribution of income. The economy depends heavily on the fishing? industry, which provides 70% of export earnings and employs 12% of the work force. In the absence of other [natural resources]? (except for abundant hydrothermal? and geothermal? power), Iceland's economy is vulnerable to changing world fish prices. The economy remains sensitive to declining fish stocks as well as to drops in world prices for its main exports: fish and fish products, aluminum, and ferrosilicon?. The center-right government plans to continue its policies of reducing the budget and current account deficits, limiting foreign borrowing, containing inflation, revising agricultural and fishing policies, diversifying the economy, and privatizing state-owned industries. The government remains opposed to EU membership, primarily because of Icelanders' concern about losing control over their fishing resources. Iceland's economy has been diversifying into manufacturing and service industries in the last decade, and new developments in software production, biotechnology, and financial services are taking place. The tourism sector is also expanding, with the recent trends in ecotourism? and whale-watching. Growth is likely to slow in 2000, to a still respectable 3.5%. |
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