This report does not constitute a rating action. Overview Institutional and economic profile Flexibility and performance profile The Russia-Ukraine conflict has had only a limited impact on Iceland's economy Iceland?s elevated inflation this year is largely due to the domestic housing market and headline levels are already declining -- Iceland has minimal direct trade links with Russia and Ukraine and is largely energy independent. -- The Central Bank of Iceland has increased its key rate to 5.75%, a cumulative 5% increase since May 2021. --Strong domestic demand and significant recovery in all main export sectors will push real GDP growth to about 5.5% in 2022, followed by a slowdown in 2023 --The government is speeding up its fiscal consolidation strategy,
