We project Iceland will continue to display strong growth dynamics, but we see risks of the domestic economy overheating, as suggested by the magnitude of recent wage hikes and house price growth. We are affirming our 'A/A-1' ratings on Iceland. The stable outlook balances the potential for improvements in Iceland's fiscal position against the risks of the economy overheating during the next two years. On June 30, 2017, S&P Global Ratings affirmed its 'A/A-1' long- and short-term foreign and local currency sovereign credit ratings on the Republic of Iceland. The outlook is stable. The affirmation reflects our view that the ratings on Iceland will continue to be supported by the country's high per capita income levels, favorable growth prospects, and
