Fitch affirms Italian rating of BBB- with a stable outlook. This is what we read in the note.
Fitch expects Italy’s GDP to grow by 4.8% in 2021, supported by a “strong recovery in the second half of the year”. For 2022, the GDP is estimated at +4.3%.
“The pandemic continues to have a significant negative impact on Italy’s economy and public accounts. High public debt and structurally weak economic growth affect the rating.” Fitch forecast this year’s debt approaching 160%. Mario Draghi’s government “could last until March 2023, the date of the next elections, and at least until the ‘election of the president of the republic in February 2022’.” The government intends to introduce reforms focusing on public administration, justice and competitiveness. Tax reform is part of the agenda but could take longer, Fitch notes. Reform efforts in these areas by previous governments “failed due to” the unpopularity of the reforms. The government has a large majority but the support is coming from different parties, and that could complicate the approval of the reforms.”
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