Dubai: President of Iceland, Olafur Ragnar Grimsson, said that emerging markets are coming in a strong way to the global economy and he highlighted the importance of building bridges with these countries.

Speaking to Gulf News in a special interview, Grimsson said: “If developed countries want to place themselves in a strategic position, they have to build alliances with emerging markets.”

“Alliance with India, China and the Middle East is very important to Iceland that has given us options that were very useful during the economic crisis,” he said.

These are emerging markets and developed countries should bridge the gap and enhance relations with these countries, Grimsson added.

“UAE and Dubai are ideal for any country to take part in this economic transformation.”

When the global financial crisis struck in 2008, Iceland was the first country to suffer a major meltdown due to the collapse of its private banks. The country’s GDP fell by 65 per cent and the value of its national currency and stock markets suffered a sharp drop as well. Many companies went bankrupt and others moved abroad.

In the second quarter of 2008 80 per cent of Iceland’s external debt was estimated to be held in the banking sector.

Synergies

Grimsson said he had been trying for many years to “build bridges between Iceland and UAE especially Abu Dhabi and Dubai because I strongly believe that there are a lot of synergies between the two countries”. He said both countries are small with small populations and “both of us are interested in the field of information technology and other areas of innovation”.

“We have to come together in different ways,” he added.

Through the gateway of Dubai we can reach different markets and expand the exposure of Icelandic companies in emerging markets, Grimsson said.

“Throughout my presidency I have emphasised the potential of building bridges with leading countries of emerging economies as I believe that while Europe and the US are very important for us, the 21st century will see the emerging markets coming in a strong way into the global economy.”

He talked about the aggressive objections he faced 14 years ago when he revealed his vision about the alliance with emerging markets and the Middle East.

Grimsson said many people doubted and worried about his vision at the time but they now accept it and are actively going along with it.

Grimsson said that Iceland’s economy is doing far better than it was five years ago and in comparison to other European countries; however, obstacles still exist.

Challenges

“In any economy there are always problems and you can never say we have completely recovered because there are always problems. But we can say that we turned the corner, reduced debt, increased economic growth and strengthened many sectors,” he said.

“Of course there are still problems and people are facing difficulties and challenges,” he added, “But if you look at the profound shock of the banking collapse in 2008 and how other European countries suffered similar crisis, Iceland’s economic recovery was faster and more effective than any other European country.”

Iceland’s economic growth registered three per cent last year which is among the highest in European countries, and the unemployment rate stood at five per cent which is also among the lowest in European countries.

“Many economic sectors such as Information Technology, tourism and fishing have grown more effectively than in the last four years,” he added.

Measuring where Iceland economy is, Grimsson said the country’s sovereign debt was never the issue.

Referring to the collapse of three Icelandic banks in 2008, he said; “They were private banks and we didn’t take public responsibility for their failure.”

Younger generation

Pointing to the lesson Iceland learnt from the crisis, Grimsson said: “In the modern world one of the most challenging tasks of leadership of a nation is to make the young generation believe that their best option is to be rooted in their home country where they can have a role to play.”

“The strength of IT sector and our people’s innovative and entrepreneurial capabilities were the most effective part of the extraordinary economic recovery in Iceland,” he said.

“It is very important for my country especially for the younger generation to see national examples of innovation and success in a competitive global market, Grimsson added.