GDP per capita in Iceland
GDP per capita has increased by about 60 per cent in real terms in the years 1980-2005. As can be seen in the chart below, there is a trend rate of growth in real per capita GDP of about 1.5 per cent a year.
Business cycles in the Icelandic economy have historically been more pronounced than in other developed countries. Research has shown that smaller countries have on average experienced larger business cycles than larger ones. In the years 1988-1995 there was a recession in the economy and GDP per capita remained stagnant in real terms. At the end of this period there was significant unused production capacity in the economy which could be put to good use in the upcoming expansion period from 1996 to 2001 when GDP per capita increased by 3.3 per cent a year on average. This was followed by a brief recession in 2002 when per capita GDP declined by 1 per cent. A vigorous expansion commenced in 2003 that is still going on, although a slowdown is expected next year. For the period 2003 to 2006, including both years, GDP growth per capita is estimated at 4.2 per cent per year, well above the long-term trend.
In spite of the business cycles of the economy, Iceland is well-placed in the OECD league table with one of the highest per capita GDP adjusted to a PPP-basis. In 2004, it amounted to 32,600 US dollars which is well above the unweighted average of all OECD countries, putting Iceland in sixth place.
Source: The Weekly Web Release - Icelandic Ministry of Finanace
