Economy news

Moody’s Investors Service ("Moody’s") has today changed the Government of Iceland's sovereign rating outlook to positive from stable and affirmed Iceland’s A3 long-term issuer rating. The government's long-term senior unsecured debt rating of A3 and the (P)A3 and (P)Prime-2 ratings assigned to its medium-term note (MTN) programme have also been affirmed. 

The key drivers for the change in the rating outlook to positive from stable are: 

1. Improving economic resilience afforeded by net external creditor position, more balanced growth and ongoing strengthening of the country‘s banking system. 

2. Anticipated further improvement in the government‘s debt metrics beyond what was previously expected. 

The positive outlook also reflects progress made in the past two years on the major preconditions we laid out at the time of the upgrade to A3 in September 2016, including the smooth removal of capital controls and the settlement of the offshore krónur situation.

Report

Third quarter 2018

• In Q3, benchmark Treasury bonds will be offered for sale in the amount of 7-10 b.kr. market value.
• It is planned to issue Treasury bonds in the following series: RIKB 22 1026 and RIKB 28 1115.

Full report

Today, rating agency S&P Global affirmed its long- and short-term foreign and local currency sovereign credit ratings on the Republic of Iceland as A/A-1 with a stable outlook. According to the rating agency this rating reflects the country’s strong institutional framework and general policymaking effectiveness, comparatively low net general government debt at 30% of GDP and high per capita income levels. The rating agency also said that the ratings are constrained by Iceland’s vulnerability to external developments as well as typically high volatility throughout the economic cycle in addition to risks stemming from overheating in the domestic economy.

According to S&P the stable outlook balances the risks stemming from the domestic economy overheating against the potential for more rapid improvements in the government and external balance sheets over the next few years.

 S&P report

Today, rating agency Fitch Ratings affirmed Iceland’s Long-Term Foreign-Currency Issuer Default Rating (IDR) at A with a stable outlook. According to the rating agency, this rating balances the economy’s high income per capita, strong performance on governance, human development and doing business indicators against its high commodity export dependence, vulnerability to external shocks and experience of macroeconomic and financial volatility.

The stable outlook reflects balanced risks to the rating. Continued falls in the public debt ratio supported by prudent fiscal policy as well as sustained improvement in the external balance sheet and resilience to external shocks might lead to a positive rating action. On the other hand, evidence of overheating through wage-price spirals, inflation overshoots and adverse effects on household and corporate balance sheets or excessive capital outflows leading to external imbalances and pressures on the exchange rate might lead to a negative rating action.

 report

The Consumer Price Index (CPI) based on prices in March 2018 is 452.0 points (May 1988=100), 0.56% higher than in the previous month. The CPI less housing cost is 388.1 points, 0.36% higher than in February 2018.
Winter sales have come to an end causing an increase in prices of clothing and footwear by 4.4% (effect on the index 0.15%). Cost of owner occupied housing (imputed rent) rose by 1.4% (0.29%).
The CPI is 2.8% higher in March 2018 than in March 2017 while the CPI less housing cost is 0.3% lower than one year ago.
The CPI compiled in the middle of March 2018, 452.0 points, is applicable for indexation purposes in May 2018. The old credit terms index for May 2018 is 8,925 points.

Read more