Over our ---year forecast period we see Iceland enjoying a high de- gree of political stability, given a very solid security environment, few societal dividing lines and a high standard of living. Uncertainty over how and when the government will normalise the country s economic situation weighs on political continuity, but Iceland will likely remain in the top -- politically stable countries globally. ...Arctic Competition: Iceland could find itself drawn into the growing competition between the US, Canada, Russia and northern European nations for Arctic resources. However, as a founding member of NATO, Iceland does not face any major external security threats, in our opinion, and its improved eco- nomic relations with China suggest it could well benefit from this competition. the ratings picture Iceland s Long-Term Political Risk Ratings are amongst the high- est in the world, having recovered from --.- in the immediate aftermath of the crisis to --.- by mid-----, although the score has now fallen back to --.-. That said, scientists working at the Icelandic Meteorological Office and elsewhere have suggested Iceland could see environmental gains from climate change. While still impressive, we do not rule out further downward revisions if the government continues along a more populist policy path over the next few years.
...Iceland s political risk profile is being hurt by the government s increasingly populist policy agenda. The country remains among the top -- globally in terms of political stability, according to our ratings, but continuation of a similar policy path over the next few years will exacerbate the risks stemming from the country s precarious external position. ...Uncertainty over how and when the government will normalise the country s economic situation weighs on political continuity, but Iceland will likely remain in the top -- politically stable countries globally. chapter -: economic outlook -- sWot analysis -- BMi economic risk ratings -- economic activity -- strong consumption to undermine Strong private consumption this year and next will hurt Iceland s long-term growth prospects by undermining recent improvements in external account stability. Narrower current account surpluses will make it harder to service external obligations, prolonging capital account restrictions and deterring much-needed foreign investment. ...However, population growth rather than productivity gains will be a major driver of economic expansion. taBle: lonG-term macroeconomic forecasts -- - Business Monitor International Ltd www contents chapter -: BMi Global assumptions --
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