S&P revises Iceland view to positive

S&P said it revised its outlook for Iceland to positive from stable and affirmed the foreign- and local-currency credit ratings at A.

“Iceland's economy will continue to expand strongly in 2023, following an already-substantial recovery from pandemic-related setbacks over the past two years. We project real GDP growth of 3.3%. The country has yet to experience pronounced effects of the conflict in Ukraine, primarily owing to its significant degree of energy independence. At the same time, tourism has bounced back, with some indicators already exceeding pre-pandemic levels; tourism remains one of Iceland's most important sectors, representing roughly over a third of exports.

Furthermore, domestic demand is holding up, despite rising inflation. The strong economic backdrop will enable fiscal authorities to consolidate much quicker than expected over the next few years. We project public deficits will decrease sharply to below 2% of GDP this year, after averaging more than 8% of GDP in 2020-2021. This should help decrease public debt, net of liquid public assets, to a low 36% of GDP by 2026,” the agency said in a press release.

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