Research Update: Iceland Ratings Raised To 'A+ ' On Strong Growth and Fiscal Consolidation; Outlook Stable

We estimate that a strong tourism season will support real GDP growth of 3.8% in Iceland this year, and domestic demand should also contribute to growth over the next few years. The government continues to focus on fiscal consolidation, not least to contain inflation, and we expect general government deficits to be lower than 2% of GDP annually through 2026. Meanwhile, we expect Iceland's extensive domestic energy sources (primarily hydro and geothermal) will shield the country from further potential adverse developments affecting global energy markets. We therefore raised our long-term ratings on Iceland to 'A+' from 'A', and affirmed our 'A-1' short-term ratings. The outlook is stable. On Nov. 10, 2023, S&P Global Ratings raised its long-term foreign and local

...- We estimate that a strong tourism season will support real GDP growth of 3.8% in Iceland this year, and domestic demand should also contribute to growth over the next few years. - The government continues to focus on fiscal consolidation, not least to contain inflation, and we expect general government deficits to be lower than 2% of GDP annually through 2026. - Meanwhile, we expect Iceland's extensive domestic energy sources (primarily hydro and geothermal) will shield the country from further potential adverse developments affecting global energy markets. - We therefore raised our long-term ratings on Iceland to 'A+' from 'A', and affirmed our 'A-1' short-term ratings. The outlook is stable....

Research Update