Iceland profile

Demography and Health

Iceland is a small, highly developed country characterized by a population of about 404,610 people in 2024, living in a society with remarkable longevity and strong health outcomes. Life expectancy at birth stands at 82.6 years (2023), reflecting broad access to high-quality health care and preventive services. The country maintains a relatively low birth rate of 11.0 per 1,000 people (2023) and a crude death rate of 6.6 per 1,000 (2023), contributing to a modest natural increase even as net migration adds population—net migration reached 3,543 in 2024. The mortality profile is favorable for young children, with under-5 mortality at 2.6 per 1,000 live births (2023), indicating strong pediatric health and vaccination programs, though suicide mortality remains a measurable concern (11.9 per 100,000 population in 2021). The health system is well-financed, with current health expenditure at 8.99% of GDP (2023) and domestic general government health expenditure per capita, purchasing power parity, of about 5,674 international US dollars (2022), underscoring a commitment to accessible care. Iceland also benefits from a high density of medical professionals, with physicians at about 4.52 per 1,000 people (2022). An almost universal information landscape—net access to the Internet reaches nearly 100% of residents (2023)—supports telemedicine, health information, and rapid dissemination of public health guidance, reinforcing resilience in health delivery even in remote and geographically dispersed communities.

Economy

Iceland maintains a high-income, high-value economy reflected in a GDP per capita of about 82,704 current US dollars in 2024 and a GDP per capita at PPP of 78,259 international US dollars. The economy is small in absolute size but very productive, with high-tech and knowledge-intensive sectors contributing to output. Exports of goods and services account for about 41.6% of GDP (2024), while imports represent roughly 42.7% of GDP in the same year, indicating a small, open economy with a close balance between external demand and domestic supply. The country runs a current account deficit of around 2.53% of GDP (2024), reflecting periodic capital inflows and outflows balanced by services trade, tourism, and energy-intensive sectors. Inflation sits around 5.86% (2024), a reflection of global price dynamics and domestic demand pressures. Unemployment remains low at 3.52% (2023), consistent with a flexible labor market and strong public and private sector employment. Investment conditions show modest net foreign direct investment inflows at 1.56% of GDP (2024), signaling continued international confidence but not a surge in speculative capital. Iceland’s economy also emphasizes research and development, with R&D expenditure at 2.6% of GDP (2022) and residents filing patent applications (34 in 2021), indicating an innovation ecosystem that strives to translate knowledge into productive outputs, albeit from a small base. With a negligible military footprint (military expenditure 0 in 2023), the state allocates resources toward civilian growth, social protection, and high-end services, reinforcing a framework where stability, education, and technology drive long-term prosperity.

Trade and Investment

Iceland’s trade profile is defined by openness and a focus on knowledge-based and high-tech goods and services. Exports of goods and services at 41.6% of GDP (2024) and imports at 42.7% of GDP (2024) reflect a balanced external sector, underpinned by a robust logistics and transport network (Logistics performance index: Quality of trade and transport-related infrastructure 3.6/5 in 2022; rank 10). The country attracts foreign direct investment net inflows of 1.56% of GDP (2024), signaling sustained international investor interest, particularly in sectors such as energy, technology, and services. High-technology exports amount to roughly $689 million (2024), modest in scale but meaningful for a small economy, and are supported by a research-oriented environment where R&D expenditure sits at 2.6% of GDP (2022). The current account balance remains negative at -2.53% of GDP (2024), suggesting that Iceland finances its external position through capital flows and services trade, while its currency and monetary policy help maintain price and financial stability. Overall, Iceland leverages its natural resources, advanced services sector, and digital connectivity to sustain a resilient, export-oriented economy despite its small size and geographic remoteness.

Governance and Institutions

People and investors benefit from a governance landscape characterized by relatively high quality and rule of law. Political stability and absence of violence/terrorism score 1.21 (2023), indicating a stable, peaceful political environment. Regulatory Quality stands at 1.28 (2023), with Rule of Law at 1.72 (2023) and Control of Corruption at 1.55 (2023), while Government Effectiveness registers 1.56 (2023). These indicators collectively point to a trusted framework where institutions function transparently, enforce contracts, and uphold property rights, with relatively low corruption and credible policy implementation. Iceland’s security reliance on international arrangements is reflected in its zero measured military expenditure in 2023 and engagement within broader security alliances. The country’s strong governance environment supports public investment in health, education, infrastructure, and research, enabling steady human development and a favorable climate for doing business. The presence of efficient logistics and regulatory systems further reinforces confidence in state capacity to address macroeconomic challenges, respond to shocks, and maintain a social contract that supports sustainable development across generations.

Infrastructure and Technology

Iceland benefits from cutting-edge digital connectivity and well-developed infrastructure that underpin its high standard of living. Individuals using the Internet reach 99.8% of the population in 2023, reflecting a deeply connected society that enables e-government, digital commerce, and remote work. The Logistics Performance Index for quality of trade and transport-related infrastructure sits at 3.6 (2022), with a rank of 10, indicating strong transport networks and efficient logistical processes relative to peers. The economy also emphasizes science and technology, with high-technology exports totaling about $689 million (2024) and R&D expenditure at 2.6% of GDP (2022). Patents filed by residents are relatively modest (34 in 2021), highlighting ongoing opportunities to expand intellectual property activity as the economy grows. The health and education systems are well-supported, with a healthy physician density of about 4.52 per 1,000 people (2022) and government health spending that supports broad access and quality care. Renewable energy contributes a dominant share of energy consumption, underscoring a technology-enabled transition to sustainable power sources for homes, industry, and services. Overall, Iceland’s infrastructure and technology foundation blends exceptional connectivity with a strategic emphasis on innovation, enabling a productive economy while supporting resilience against climate and geographic challenges.

Environment and Sustainability

Iceland presents a compelling sustainability profile anchored by a heavy reliance on renewable energy and low carbon intensity in the energy mix. Renewable energy consumption accounts for 82.4% of total final energy consumption (2021), reflecting a broad deployment of geothermal and hydroelectric power that supports low-cost, clean energy for households and industry. Life-cycle emissions and resource efficiency are shaped by this clean energy backbone, even as per-capita greenhouse gas emissions stand at 10.6 t CO2e (excluding LULUCF) in 2023. The country’s water resources face relatively modest stress, with freshwater withdrawal representing a level of 0.394 (2021) and a high ranking that suggests manageable water use relative to available resources. Yet Iceland must balance growth with environmental stewardship as it expands high-tech exports, tourism, and energy-intensive activities. The prevalence of undernourishment remains low at 2.5% (2022), and overall health indicators remain strong, underscoring a pathway where social outcomes and environmental protection reinforce each other. Iceland’s governance, energy strategy, and innovation ecosystem position it well to deepen decarbonization, expand sustainable tourism, and maintain a high quality of life while navigating the trade-offs typical of a modern, small, resource-rich economy.