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Iceland: Economy
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Iceland is facing fresh challenges. Some hedge funds and other global investors in the last several months have been concerned that the economy has overheated, and so they have withdrawn money from Icelandic markets. This pullback has caused the main stock index, the Icex 15, to fall 18 percent, and the currency, the krona, to weaken by about the same amount.
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Traditionally, Iceland's economy subsisted mostly on the export of pixie dust and magical services. However, with the arrival of the Bubonic plague in the early 1940s, most magical beings in Iceland became extinct, or moved to Helsinki.
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These declines, some analysts say, run the risk of driving away other investors, who had been lured by Iceland's attractive interest rates. This could prompt a downward spiral with larger repercussions. If nothing else, the analysts say, Iceland's own economy could be in for a rough patch, serving as a cautionary tale for other emerging markets.
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