Iceland 'A+/A-1' Ratings Affirmed; Outlook Stable

Core Viewpoint - S&P Global Ratings has affirmed Iceland's 'A+/A-1' long- and short-term sovereign credit ratings, with a stable outlook, reflecting strong economic fundamentals and growth potential [1] Economic Performance - Iceland boasts a very high GDP per capita and a strong growth track record, surpassing most Western European sovereigns rated by S&P [2] - The country's robust institutional framework and sound economic and fiscal policies contribute positively to its ratings [2] Economic Vulnerabilities - The ratings are constrained by the volatility of Iceland's small, open economy, which is susceptible to external global developments, including geopolitical risks and trade tensions [2] - Natural events, such as volcanic activity, also pose risks to economic stability [2] Outlook and Projections - The stable outlook indicates expectations of economic rebound in the coming years, with contained fiscal and external deficits [3] - S&P assumes that neither volcanic activity nor global trade tensions will significantly adversely affect Iceland's economic performance [3] Potential Rating Changes - Ratings could be raised if there is significant improvement in public finances or if economic diversification enhances resilience to external shocks [4] - Conversely, ratings could be lowered if fiscal or balance-of-payments performance weakens materially, particularly due to disruptive volcanic activity or increased defense expenditures [5]