Iceland feels heat after years of growth - by David Ibison
Investors are wondering whether Iceland could be heading for a bout of financial turbulence.The reason for the growing scrutiny of a country with a population of just 300,000 and an economy 0.1 per cent that of the US is the perceived risk associated with its phenomenal growth. Its economy might be the smallest in the Organisation for Economic Co-operation and Development, but it has GDP per capita of $40,000 - the sixth highest. Fishing remains the most important source of export revenue but its share of GDP has declined from 16 per cent in 1980 to 6 per cent last year. It has been replaced by finance, insurance and real estate, whose combined share has risen from 17 per cent of GDP in 1998 to 26 per cent in 2006. Unsurprisingly in this environment, Iceland's three main banks have boomed. Glitnir, Kaupthing and Landsbanki had total assets of more than EUR110bn at the end of 2006, eight times the country's GDP.
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