S&P predicts recovery next year
Standard & Poor’s forecasts a trade surplus in Iceland in the coming years, despite the severe blow the country’s tourism sector has sustained. The agency also predicts the government will succeed in turning public finances around after 2021, despite ongoing support to the wider economy in response to the pandemic.
The ministry quotes an S&P press release which says Iceland’s credit rating could improve if its economic recovery is stronger than predicted—and especially if the crisis helps create a more diverse economy and export base in Iceland. That, the statement says, would reduce fluctuations in trading conditions and speed up the State treasury’s recovery.
The country’s rating could go down, however, if the pandemic causes more long-lasting damage to the economy’s production capacity than already expected. That could lead to even higher public debt.