New Crisis of Icelands Economy

DOI: 10.20542/0131-2227-2022-66-7-33-42
A. Kravchuk,
Far Eastern Federal University, Asia Pacific International Institutions & Multilateral Cooperation Studies Center of Oriental Institute – School of Regional and International Studies, 8, Sukhanova Str., Vladivostok, 690091, Russian Federation.

Received 29.03.2022. Revised 04.04.2022. Accepted 30.04.2022.

Abstract. Iceland was affected by the 2008 financial crisis more than any other European state, as its financial sector virtually collapsed. In 2020 Reykjavik again faced the economic crisis triggered by the coronavirus pandemic, which, according to government forecasts, should have caused the largest decline in GDP and exports of goods and services for half a century. In this article, the author intends to explore the history of formation and the current state of the Icelandic economy, as well as the state policy on the development of its main export industries – fishing, aluminium production and tourism. The paper also provides an assessment of the nature of the new economic crisis impact on the country’s key industries and of the prospects for recovery and further growth of the economy after quarantine restrictions removed. The current crisis has less affected the Icelandic fishing and aluminium industry, which are quite stable and provide production volumes close to its maximum values, but has severely hit its tourism, as the industry has lost more than 2/3 of the export earnings. However, the decline in number of tourists began even before the pandemic and was due to the fact that Icelandic air companies lost about 53% of their maximum carrying capacity. Nevertheless, the crisis created preconditions for the early recovery of the Icelandic tourism industry: national currency got weaker, the unemployment grew, the cost of labor decreased, but, unlike during the 2008 crisis, the tourism infrastructure was actively developing. In conclusion, the author suggests that the crisis will push Iceland to look for new sources of economic growth, which could be based on developing energy and science intensive industries (e.g. data centers, crypto mining farms, bioengineering and biomedicine centers, etc.). Moreover, the growing US-China rivalry over influence on Iceland could contribute to the latter’s economic development, as historical analysis shows that Reykjavik is more than able to competently use the contradictions between states pursuing great-power politics in order to obtain certain economic benefits.

Keywords: Arctic, Iceland, fishing, aluminium industry, tourism, economy


1. Iqbal R., Todi P. The Nordic Model: Existence, Emergence and Sustainability. Procedia Economics and Finance, 2015, vol. 30, pp. 336-351. DOI: 10.1016/S2212-5671(15)01301-5

2. Kravchuk A.A. Seafood industry in Norway’s economic system. World Eonomy and International Relations, 2021, vol. 65, no 5, pp. 78-86. (In Russ.) Available at:

3. Steinsson S. The Cod Wars: a Re-analysis. European Security, 2016, vol. 25, no. 2, pp. 256-275. Available at:

4. Guðmundur J. Guðmundsson. The Cod and the Cold War. Scandinavian Journal of History, 2006, vol. 31, no. 2, pp. 97-118. Available at:

5. Magnusson B.M. The Loophole Dispute from an Icelandic Perspective. Centre for Small State Studies Publication Series University of Iceland, Working Paper, 2010. 31 p.

6. Grande D. Rethinking Aluminum in Iceland’s Economy: Balancing Risk and Reward. Available at: (accessed 25.03.2022).

7. Sæþórsdóttir A.D., Hall C.M., Wendt M. From Boiling to Frozen? The Rise and Fall of International Tourism to Iceland in the Era of Overtourism. Environments, 2020, vol. 7, no. 59, pp. 1-19. Available at:

8. Dams T., van Schaik L., Stoetmanet A. Presence before Power: China’s Arctic Strategy in Iceland and Greenland. Clingendael Report, June 2020. 42 p.


1. Lessons from the Fall of the Icelandic Banking System. Available at: (accessed 25.03.2022).

2. Statistics Iceland. Available at: (accessed 25.03.2022).

3. The World Bank Indicators Database. Available at: (accessed 25.03.2022).

4. 2020 Human Development Index Ranking. United Nations Development Programme. Available at: (accessed 25.03.2022).

5. Social Progress Index 2020. Available at: (accessed 25.03.2022).

6. Corruption Perceptions Index 2020. Transparency International. Available at: (accessed 25.03.2022).

7. The Global Competitiveness Report 2019. World Economic Forum, October 2019. 648 p.

8. Global Innovation Index 2020. WIPO. Available at: (accessed 25.03.2022).

9. Economic Forecast, Winter 2020. Hagti.indi Statistical Series, October 2020, vol. 105, no. 7. 22 p.

10. Iceland Trade Picture. European Commission. Available at: (accessed 25.03.2022).

11. The Icelandic Economy 2020: Current State, Recent Developments and Future Outlook. Reykjavik, Iceland Chamber of Commerce Report, September 2020. 70 p.

12. The State of World Fisheries and Aquaculture 2020. Sustainability in Action. Rome, FAO, 2020. 244 p.

13. Fisheries Management. Fiskistofa. Available at: (accessed 25.03.2022).

14. Iceland and NATO. NATO. Available at: (accessed 25.03.2022).

15. Blackmail as a weapon: cod wars. Warspot, 16.05.2016. (In Russ.) Available at: (accessed 25.03.2022).

16. Agreement between the Governments of Iceland, Norway and Russia Concerning Certain Aspects of Co-operation in the Area of Fisheries. Available at: (accessed 25.03.2022).

17. International Cooperation. Fiskistofa. Available at: (accessed 25.03.2022).

18. Mackerel War on the Cards as Iceland Increases Quota? Iceland Review. Available at: (accessed 25.03.2022).

19. The Energy Sector. Askja Energy. Available at: (accessed 25.03.2022).

20. Electricity Prices. Available at: (accessed 25.03.2022).

21. Top Aluminum Exporters by Country. World’s Top Exports. Available at: (accessed 25.03.2022).

22. Nor.ural. Available at: (accessed 25.03.2022).

23. ISAL. RioTinto. Available at: (accessed 25.03.2022).

24. Alcoa Fjar.aals. Available at: (accessed 25.03.2022).

25. Foreign Investment. Askja Energy. Available at: (accessed 25.03.2022).

26. Aluminium Production. All about Aluminium. Available at: (accessed 25.03.2022).

27. Is Rio Tinto’s ISAL Smelter a Bargain or a Smart Investment? Available at: (accessed 25.03.2022).

28. LME Aluminium. LME. Available at: (accessed 25.03.2022).

29. Consumer Price Index Data from 1913 to 2020. US Inflation Calculator. Available at: (accessed 25.03.2022).

30. The Rise and Fall of Iceland’s Tourism Miracle. Available at: (accessed 25.03.2022).

31. Iceland Tourism Prepares for a Comeback. Available at: (accessed 25.03.2022).

32. PLAY Destinations. Available at: (accessed 25.03.2022).

Registered in System SCIENCE INDEX

For citation:
Kravchuk A. New Crisis of Icelands Economy. World Eonomy and International Relations, 2022, vol. 66, no. 7, pp. 33-42.

Comments (0)

No comments

Add comment






Dear authors! Please note that in the VAK List of peer-reviewed scientific journals, in which the main scientific results of dissertations for the degree of candidate and doctor of sciences should be published for the “MEMO Journal” the following specialties are recorded:
economic sciences:
5.2.5. World Economy.
5.2.1. Economic Theory
5.2.3. Regional and Branch Economics
political sciences:
5.5.4. International Relations
5.5.1. History and Theory of Politics
5.5.2. Political Institutions, Processes, Technologies


Current Issue
2024, vol. 68, No. 5
Topical Themes of the Issue:
  • Are There Any Ways to Break Through the Korean Nuclear Impasse?
  • Contemporary U.S. Taiwan Policy: Balancing on the Edge
  • The Gulf Monarchies’ Vision of the Global Order Transformations and the Russian Place in It
  • At Post-Soviet Space
Submit an Article
The Editorial Board invites authors to write analytical articles on the following topics:
  • changes in the processes of globalization in modern conditions
  • formation of the new world order
  • shifts in civilization at the stage of transition to a digital society

The editors are also interested in publishing synthesis articles / scientific reviews revealing the main trends in the development of certain regions of the world - Latin America, Africa, South Asia, etc.