Iceland's Scandinavian-type social-market economy combines a capitalist structure and free-market principles with an extensive welfare system. The economy depends heavily on the fishing industry, which provides 40% of export earnings, more than 12% of GDP, and employs around 5% of the workforce.
In autumn 2013, the Icelandic government approved a joint application by Icelandic, Chinese and Norwegian energy firms to conduct oil exploration off Iceland's north-east coast.
Abundant geothermal and hydropower sources have attracted substantial foreign investment in the aluminium sector, boosted economic growth, and sparked some interest from high-tech firms looking to establish data centres using cheap green energy.
Domestic banks have recently expanded aggressively in foreign markets, and consumers and businesses borrowed heavily in foreign currencies, following the privatisation of the banking sector in the early 2000s.
Composition of GDP