On The Road To Recovery

The ultimate question on everyone’s lips is did Iceland make the right choice by allowing the banks to fail? Jon Danielsson (2011) argued that “Iceland’s IMF programme has been unsuccessful”. Nonetheless I believe the answer is absolutely. Iceland’s economy has grown by 3% over the last year and considering the crisis is still growing elsewhere; it can be said that Iceland is doing pretty well for itself.

What were the benefits of defaulting? The most obvious reason for this happy ending was Iceland’s independence with the Krona. Remaining to stay as a strong fishing society has also benefitted as it has allowed Iceland to become gifted with natural resources. There has also been a decline in unemployment as new jobs are being created from the increase in recent tourism in the country. This boost in the economy has given employers faith and self-assurance and as a result they are now willing to employ people once more. Iceland was greatly affected by the recent crisis but with its supplies and intellectual labour force Iceland is willing to overcome the current difficulties it is facing.

How is Iceland ensuring a similar banking crisis never occurs again? Iceland is now working closely with the IMF and better bank supervision, as well as regulation, has been put in place to prevent another crisis arising in the future. Finally Iceland is fighting back and if the worldwide financial system fully recovers from the present crisis Iceland will be completely back to normal. To conclude it would be as if nothing ever happened to the country, apart from a few extra fish and an erupting volcano.

For an overview of Iceland's crisis see: Iceland's Journey