According to the global agency Fitch Ratings, Iceland owes more than any other country of the over 90 countries that it evaluates and is far from stable.
The Fitch report explains that due to increase in private consumption and investment, the trade deficit went from 16 percent to 20 percent of GDP in 2006, resulting in tripling in debt since 2000, Morgunbladid reports.
The Fitch report says Iceland owed 357 percent of the national economy’s foreign revenues in 2005.
Such unstable economy leaves Iceland vulnerable in case interests increase overseas, for instance, or if investors change their agenda suddenly.
The report concludes that a depression might be lurking around the corner with serious consequences for homes, companies and banks in Iceland.
Yet Fitch says that Iceland is a developed country with strong and transparent institutions which might help protecting the economic system from outside blows and help it adjust to changing circumstances.