Iceland is governed by a centre-left coalition under Prime Minister Kristrún Mjöll Frostadóttir of the Social Democratic Alliance, with President Halla Tómasdóttir as head of state. The economy shows mixed signals: GDP contracted by 3.0% in Q2 2026 (Eurostat), while inflation rose to 6.1% in August 2026 (Eurostat) and unemployment remained stable at 5.8% (Eurostat).
