Iceland’s sovereign credit rating remains stable at A, says Fitch

Iceland’s sovereign credit rating remains stable, with Fitch maintaining its assessment at an A rating. According to Fitch, this rating reflects the country’s high per capita income and effective governance, aligning it with nations boasting AAA and AA ratings. The report highlights substantial pension fund assets, a reliable financial system, and strong economic accounts within the private sector as key strengths of Iceland’s economy.

Fitch also notes that the government demonstrates significant resilience, supported by a strong foreign exchange reserve and solid financial position. These factors mitigate the country’s vulnerability to external shocks. However, challenges remain due to the economy’s small size, reliance on a narrow range of exports, and elevated public debt levels, which hold back its credit rating.

The agency projects a notable cooling of economic growth, forecasting an increase of only 0.6 percent for 2024, a sharp decline from the previous year’s 4.1 percent growth.

Overall, while Iceland’s creditworthiness is affirmed, it faces ongoing economic challenges that may influence future assessments.