In recent years, Iceland has strengthened its fiscal and external balance sheets. Even so, the small, relatively concentrated economy remains vulnerable to external developments and the risk of re-emergence of domestic overheating. We project growth rates will slow over the coming years, as tourism inflows decelerate. We are affirming our 'A/A-1' ratings on Iceland. The outlook is stable. On Dec. 7, 2018, S&P Global Ratings affirmed its 'A/A-1' long- and short-term foreign and local currency sovereign credit ratings on Iceland. The outlook is stable. The stable outlook balances the potential for Iceland's stronger-than-anticipated fiscal and balance of payments performance against the risks posed by the economy's dependence on foreign trade developments and potential re-emergence of overheating stemming from the upcoming
