January 22, 2009 / 1:36 PM / 9 years ago

REFILE-FACTBOX-Iceland set for early election as protests worsen

 (Refiles to correct link to main story)
 Jan 22 (Reuters) - Iceland's main ruling party is likely to
call an early election this year, a senior party official said
on Thursday, as protests turned violent.
 Demonstrations against the government and the central bank
have become regular fixtures in Reykjavik since the currency
plunged and the financial system collapsed.
 Here are some facts about Iceland and its economy:
 -- Iceland's Finance Ministry said this week that it saw
real GDP falling 9.6 percent in 2009 and remaining largely
unchanged in 2010 compared with its October forecast of down 1.6
percent in 2009 and growth of 1.1 percent next year.
 -- It also saw inflation for 2009 at 13.1 percent, compared
to its October forecast of 5.7 percent. For 2010, it saw
inflation coming down to 2.7 percent to put it in line with the
central bank's target.
 -- The government said it expected the current account
deficit, currently at an estimated 22 percent of GDP, to reverse
to a 6.1 percent surplus this year and to 5.6 percent in 2010.
Unemployment was seen rising to an average of 7.8 percent in
2009 and rising even further in 2010, to 8.6 percent.
 -- Iceland, whose prime minister Geir Haarde had warned of
"national bankruptcy" said at the end of last year that the
financial crisis which ravaged the nation's banking system and
the Icelandic crown, has underscored the pitfalls of managing a
currency in a small, open economy.
 -- The International Monetary Fund (IMF) approved a $2.1
billion loan for Iceland on Nov. 19 as part of a package of
assistance which totalled about $10 billion.
 -- Iceland's major banks and currency had collapsed under
the weight of billions of dollars of debt accumulated in an
aggressive overseas expansion into financial services.
 -- The country's financial stature had swelled in recent
years as its banks expanded rapidly overseas. Investors took
large positions in its high-yielding currency and foreign firms
and individuals poured money into local projects.
 -- Until its banking sector was deregulated in the late
1990s, the island's economy was based mainly on fishing, and
marine products accounted for the majority of exports.
 -- Important exports now include aluminum, ferro-silicon
alloys, equipment and electronic machinery for fishing and fish
processing, and pharmaceuticals.
 -- Before the crisis, Icelandic businesses had targeted
investments in the retail and financial sectors in Britain and
the Nordic region and in the telecoms and pharmaceutical sectors
in Eastern Europe.
 CAPITAL - Reykjavik
 POPULATION - 320,000
 ETHNICITY - Some 96 percent of Icelanders are descendants of
Norwegian, Scottish and Irish immigrants.
 RELIGION - 92 percent of Icelanders are Lutheran
Protestants. There are small minorities of other Protestants and
Roman Catholics.
 LANGUAGE - Modern Icelandic is closely related to Old Norse,
the language of the original Viking settlers.
 GOVERNMENT - Legislative power is vested jointly in the
president and the 63-seat Althingi, a single chamber elected for
a four-year period. The Althingi traces its origins to the
assembly established by Viking settlers in A.D. 930, making it
the world's oldest parliament.
 SOME HISTORY: The Vikings' independent commonwealth
collapsed in the 13th century when the island came under the
rule of Norway and, later, Denmark. Granted home rule in 1918,
the Icelanders finally broke from the Danes after the Nazi
occupation of Denmark in April 1940. Following a referendum, the
Republic of Iceland was proclaimed in June 1944.
 AREA - 103,100 sq km (39,810 square miles). Four-fifths of
the island is uninhabited. Glaciers cover 11 percent of the land
and trees are a prized rarity.

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