Iceland

A sparsely-populated North Atlantic island, is famous for its hot springs, geysers and active volcanoes. Lava fields cover much of the land and hot water is pumped from under the ground to supply much of the country's heating.

became an independent republic in 1944 and went on to become one of the world's most prosperous economies. However, the collapse of the banking system in 2008 exposed that prosperity as having been built on a dangerously vulnerable economic model.

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In recent years enjoyed a standard of living that was among the highest in the world. Its prosperity initially rested on the fishing industry, but with the gradual contraction of this sector the ic economy developed into new areas.

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By the beginning of the 21st century, had come to epitomise the global credit boom. Its banks expanded dramatically overseas and foreign money poured into the country, fuelling exceptional growth.

Before the global credit crunch took hold, ic banks had foreign assets worth about 10 times the country's GDP, with debts to match, and ic businesses also made major investments abroad.

The global financial crisis of 2008 exposed the ic economy's dependence on the banking sector, leaving it particularly vulnerable to collapse.

In October 2008, the government took over control of all three of the country's major banks in an effort to stabilise the financial system. Shortly after this, became the first western country to apply to the International Monetary Fund (IMF) for emergency financial aid since 1976.

The economy shrank by 6.8% in 2009, though by the end of 2010 there were some signs of an improvement, with the first growth recorded for two years.

Environmental issues