The economy plunged
Border restrictions hit the tourism sector hard
Barriers to entry are high
Innovation lags behind
PISA scores have trended down
Carbon emissions exceed the OECD average
The pandemic hit Iceland mildly
The economy suffered a large contraction, but policy support helped
Iceland’s economy is highly egalitarian
The economy is recovering
The labour market is stabilising
External positions have weakened
Services other than tourism are getting more important
Foreign tourism collapsed, while domestic travel compensated a bit
Monetary policy remains accommodative
Households benefitted more than firms from the easing of monetary conditions
The banking sector appears sound
Fiscal policy is supporting the economy
Adjustments will be required to stabilised the debt ratio over the longer run
Spending quality will improve as public investment is stepped up
Tax revenues declined
High marginal tax rates discourage second earners, often women
Competitiveness has improved but productivity growth is low in some sectors
Barriers are high for firms to enter the market
Regulation of professions is stringent
Basic skills are relatively weak
Vocational education and training needs strengthening
Corruption is perceived as low
Iceland’s overall innovation performance compares well internationally
Innovation foundations are solid but some critical outcomes remain weak
There is scope to boost productivity
The contribution of digital-intensive sectors in added value is comparatively low
Iceland has scope to raise R&D spending
Support to business R&D is comparatively generous
Innovative outcomes of smaller firms could improve
Icelandic firms, especially smaller ones, have scope for greater adoption of digital technologies
Adoption of advanced technologies has much productivity potential
The regulatory burden on businesses should be eased
The insolvency framework can be more innovation-friendly
Bank lending is an important source of financing for smaller firms
The debt-bias in the Icelandic corporate tax system could be lowered
E-Government indicators fare well but there is room to improve digital government
Iceland lags in teachers’ ICT preparedness
Tertiary innovation performance can improve
The share of international students in tertiary education is low
Relatively few students graduate in STEM fields
Participation in lifelong learning remains relative low for some groups
Managerial skills can improve further
Collaborative research remains weak
Iceland relies mostly on renewable energy
Overall carbon emissions are above the OECD average
Industry contributes most to carbon emissions
Iceland wants to reduce carbon emissions by 40%
Iceland prices carbon above the OECD average
Fuel consumption and fuel price trajectories
Iceland spends less on research and development than its Nordic peers
Public investment in green infrastructure will rise
The burden of environmental regulation is slightly above the OECD average
The economic impact of a sizeable carbon tax increase would be small
Foreign direct investment is constrained