S&P Upgrades Iceland’s Economic Outlook to Positive

2026-03-09 - 13:25

The credit rating agency S&P Global Ratings has revised its outlook on Iceland to positive from stable, while reaffirming the country’s long- and short-term sovereign credit ratings at A+/A-1. As reported by Stjórnarráðs Íslands, the update was announced on 6 March and reflects expectations that Iceland’s public finances could strengthen over the coming years. What's the Story? Outlook on Iceland revised to positive from stable by S&P Global Ratings on 6 March 2026 Sovereign credit ratings for foreign and local currency affirmed at A+/A-1 Net general government debt projected by S&P to decline to about 35% of GDP by 2029, from an estimated 41% in 2025 Finance buildings in Iceland. Photo: Golli. Iceland Review. Credit Rating Update According to S&P, improved budget performance may contribute to a continued reduction in government debt. The agency forecasts that net general government debt could decline to around 35% of gross domestic product by 2029, down from an estimated 41% in 2025. Under its baseline scenario, Iceland’s general government deficit is projected to fall to 0.2% of GDP by 2027 from about 1% last year, before reaching a balanced budget from 2028. Icelandic króna. Photo: Golli. Iceland Review. S&P noted that fiscal outcomes could improve further if economic growth proves stronger than expected, if spending controls reduce government expenditure, or if privatisation of state-owned assets generates additional revenue used to reduce debt. However, the outlook could return to stable if economic conditions weaken. The agency cited possible risks including slower economic growth, global trade tensions, or possible disruptions affecting Iceland’s tourism industry.