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Morgan Stanley: “Very difficult fall for Meloni. Rising deficit, weak growth and spread above 200 points by the end of the year”

Morgan Stanley: “Very difficult fall for Meloni. Rising deficit, weak growth and spread above 200 points by the end of the year”

After freezing rain that arrived on Monday from European CommissionWhich expects a strong slowdown in Italian growth for the current year and more for 2024, according to the rating agency. Morgan Stanley It puts a load on him. In a report dedicated to the peninsula, he wrote that “the United Nations The complex 2024 budget Maybe he’ll make this fall a lot Demanding “Indeed, the government deficit will be ‘higher’ in the face of weak GDP growth, with clear implications for the direction of the interest rates to be paid to those who buy maturing debt securities. “We expect that Spread Among the securities, BTP bonds and 10-year bonds will return to… 200/210 basis points The analysis warns that by the end of the year. “Factors supports “Which allowed the difference to settle at 160 basis points was resolved.”

Morgan Stanley confirms how Italian GDP in the second quarter surprised by negative, falling by 0.4%, and even if a “recovery in the third quarter” is not ruled out, indicators such as the Purchasing Managers’ Index and the German economic outlook indicate limited room for improvement. The agency estimates at +0.8% for 2023 (versus +0.9% estimated by Brussels) and for 2024, from the previous +1% expected this year and from +0.9% expected after that. “Although this is not our base scenario, it is One recession Analysts warn that it cannot be completely ruled out.

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Weaker growth will likely lead to “higher fiscal deficits” in 2023 and 2024, with “the cost of restructuring tax credits, such as tax credits, rising.” Super bonus“Which “could be a driver of this increase.” The deficit is expected to reach 5% in 2023, but “insert 30 billion additional expenses For the super bonus, it can be increased by 1.5 percentage points this year“While in 2024 he appears in”4.2% compared to the government’s forecast of 3.7% in April“.

As for the spread, the widening will be fueled, Morgan Stanley wrote, by “various factors, including deteriorating data on euro zone activity, the preference for duration over credit and the potential announcement of a cut.” European Central Bank Regarding BEP Investments, the securities purchase program launched to help eurozone economies during the height of the pandemic, which currently envisages reinvestment “at least until the end of 2024.”