Country Reports

Iceland Country Report

Content provided by
IHS Markit Logo

Risk Level

Very High


Executive Summary

Iceland enjoys access to the EU Single Market through its membership of the European Economic Area. The country's application to join the EU, submitted following the 2008–09 financial and banking collapse, has been suspended and is unlikely to resume under the current government term and without a prior referendum on membership. A series of scandals prompted two snap elections in 12 months, with the latest inconclusive vote in October 2017. Coalition negotiations eventually yielded a broad left-right, three-party coalition under the premiership of the Left-Green party. This has proven stable, with early election looking increasingly unlikely in 2020. Policy priorities will continue maintaining economic stability and developing the island's infrastructure.The Icelandic economy is expected to accelerate modestly in 2020, following near stagnation in 2019. Although some of the temporary factors which weighed down on activity in 2019, such as the collapse of one of a large domestic airline, are unlikely to be repeated this year, soft external demand will keep growth modest.Against a background of deteriorating economic outlook, the Central Bank of Iceland has cut interest rates five times in 2019 despite inflation standing above its 2.5% target. We estimate that interest rates will remain at their current level at least until the end of the first half of 2020, although the central bank will be ready to take action if the economic situation deteriorates further.
Last update: January 17, 2020

Operational Outlook

Iceland welcomes foreign investment, but with restrictions such as investment caps in some strategic sectors. The country’s abundance of geothermal energy provides unique attributes such as cheap energy prices. The workforce is flexible, skilled, productive, and heavily unionised, with collective wage agreements as the norm. Unions are non-political and decentralised, and tend to prioritise negotiations over strikes. Labour strike risks are the most prominent in the mining and fishing industries. Corruption is considered a low risk; however, in October 2019 Iceland was added to the Financial Action Task Force (FATF) grey list for insufficient anti-money-laundering legislation.

Last update: November 19, 2019



Terrorism risks are negligible. There are few high-profile targets aside from a NATO radar station, and no known non-state armed groups operate in the country. The most probable form of attacks would be a shooting attack by a lone radicalised jihadist actor against state or Jewish assets, or a similar attack against Muslim assets or individuals by far-right individuals. However, both scenarios are unlikely overall. From October 2015, Iceland is a signatory to the Council of Europe Convention on the Prevention of Terrorism protocol regarding foreign terrorist fighters.

Last update: December 5, 2019


Crime rates in Iceland are very low by international standards. Violent crime is rare, despite a high rate of gun ownership. Organised crime is relatively minor and mostly perpetrated by Eastern European networks and motorcycle gangs. Petty crime is mostly concentrated in the capital, Reykjavík. The investigation and prosecution of financial crime has expanded exponentially since the 2008–09 financial and banking collapse, when a special prosecutor's office was established, the remit and resources of which have since been expanded. However, in October 2019, Iceland was added to the Financial Action Task Force (FATF) grey list due to inadequate anti-money laundering and counter-terrorist financing measures.

Last update: December 5, 2019

War Risks

Iceland faces negligible risks of interstate or civil war, although the country occupies a key geostrategic location in the event of future global tensions. Despite being a NATO member, Iceland has no standing army, although it maintains a coastguard and air defences. NATO countries operate a periodic, rotating deployment of fighter aircraft to patrol Iceland’s airspace. Iceland disputes the ownership of Rockall Island and its surrounding oil reserves with the United Kingdom, Ireland, and Denmark. However, any disputes are likely to be resolved at the diplomatic level and remain extremely unlikely to lead to a military conflict.

Last update: December 5, 2019

Social Stability


There is little support among the wider public for perceived 'anti-social behaviour’, which limits the incidence of disruptive activism. Political and environmental protests tend to be peaceful, aimed at raising awareness of the relevant issues, and concentrated outside government offices in Reykjavík rather than intended to cause disruption or damage to business operations. Political protests have become more regular in the aftermath of the protests that followed the country’s financial and banking collapse in 2008–09. Perceived corrupt practices will also remain a likely trigger of protests, as was the case in November 2019.

Last update: December 6, 2019

Health Risk


Vaccinations required to enter the country

No vaccinations are required to enter the country.

Routine Vaccinations

Hepatitis B: A vaccine is available for children at least two months old.

Diphtheria-Tetanus-Polio: A booster shot should be administered if necessary (once every ten years).

Other Vaccinations

For Children: All standard childhood immunizations should be up-to-date. In the case of a long stay, the BCG vaccine is recommended for children over one month and the MMR (measles-mumps-rubella) vaccine for children over nine months.

Last update: April 5, 2019

Natural Risks

Very high
Last update: April 5, 2019


Last update: April 5, 2019

Practical Information


Temperatures in the summer are mild and during this time (late may-mid-August), the sun sets very late in the day. At the end of June, the sun sets around midnight and rises at 3:00 am. The Aurora Borealis can be seen beginning in the end of August. In the winter, nights are very long and temperatures cool. November, December, and January are the darkest months of the year. Rain is common throughout the year and weather conditions can change several times within the same day.

Useful Numbers

Country Code: +354
Police: 112
Fire Dept.: 112
Ambulance: 112


Voltage: 220 V ~ 50 Hz


Last update: April 5, 2019