Iceland Mag

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Iceland Mag

Economy

Icelandic economic growth in 2017 highest in the Nordic region: Unemployment only 2.2%

By Staff

  • A great view, and a strong economy The natural beauty has helped propel economic growth in Iceland, by acting as a magnet for tourism.  Photo/Vilhelm

The Icelandic economy is in many ways unique in the Nordic context, according to a new report from the Nordic Council of Ministers. Unemployment is lower and labor participation higher than in any of the Nordic countries, the economy has grown more rapidly and the population has increased faster, despite a lower level of immigration.

The Nordic Region comprises in addition to Iceland the Scandinavian countries of Denmark, Norway, Sweden as well as Finland, and Åland, which is part of Finland, and Greenland and the Faeroe Islands, both of which are parts of Denmark. The combined economy of the Nordic countries is the 12th largest economy in the world.

The report, called State of the Nordic Region (pdf), finds that the Icelandic economy has the strongest growth level in the Nordics. Iceland has also been catching up with Norway in terms of GDP per capita. Measured on a per-capita basis Norway is by far the wealthiest of the Nordic countries, with Iceland coming in second place, closely followed by Denmark.

A strong labour market
The report notes that Iceland has not only the highest labour force participation in the Nordics, but all of Europe. The labour force participation of more than 85% reflects both higher than average labour force participation rates for native born and immigrant populations. The economically inactive population of Iceland is just 9%, the lowest in Europe and the Nordic Region. 

The unemployment rate is also the lowest in the Nordic countries. The average unemployment rate in the Nordic countries is below the EU average of 8.4%. The Icelandic unemployment rate in 2017, which was just 2.2% according to the Icelandic Directorate of labour (pdf) is significantly lower than that for Norway (4.3%), Denmark (5.7%) or Sweden (6.3%). The unemployment rate in Finland (8.2%) is close to the EU average.

Youth unemployment in Iceland is also significantly below the other Nordic countries. Only 4.5% of people 18-25 years old are neither employed nor attending school or some form of vocational training. The average for Europe is 15.2%. Finland has the highest rate of inactive youth, 13.7%, followed by Sweden (8.4%), Denmark (7.7%) and Norway (7.4%).

Immigration plays a smaller role
Population growth in Iceland has also been very high. Since 2007 the population has grown by 10%, mostly due to natural increase. Net migration only accounted for 2% of the total, the lowest level in the Nordic countries, where immigration was responsible for most of the population growth over the period. 

The Icelandic population is also relatively younger than that of the other Nordic countries. Older people, (65 years and older) are only 14% of the total population in Iceland. The highest share, 20.9%, was registered in Finland.

 

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