Fitch raises Italy’s rating to BBB
Fitch promotes Italy. The agency raised the rating to ‘BBB’ from ‘BBB-‘ with a stable outlook. Fitch’s decision, which also raised the growth estimates for the Italian economy, “crowns a series of positive assessments released by five other rating agencies, which in recent weeks have improved their outlook on the country”, comments the Treasury. On October 22, S&P confirmed Italy’s ‘BBB’ rating by raising the outlook to positive, and after a week Dbrs had maintained its rating at BBB (high). At the same time, it confirmed the short-term issuance rating at R-1 (low), changing the trend on all ratings from negative to stable. Moody’s, on the other hand, had not updated its opinion on Italian debt at the beginning of November, which remains firm to the decision of 7 May when it left it unchanged at Baa3 with a stable outlook.
Fitch also raises the estimate on Italian GDP to + 6.2%
The recent decisions of the rating agencies, the Mef underlines, “confirm the solidity of the economic policy pursued by the Government and the need to continue vigorously on the path of reforms and investments, according to the plan agreed with Europe”. Fitch also raised the Italian GDP estimate for 2021 to + 6.2%. Quarterly economic growth, a note reads, was 2.7% and 2.6% respectively in the second quarter of this year and in the third quarter, “well above the entire euro zone”. The agency expects “GDP to reach pre-pandemic level in the first quarter of 2022” and to stand at + 4.3% next year and 2.3% in 2023. “The high rate of vaccination and compulsory vaccination of employees should mitigate the economic impact of the latest pandemic wave “, explains Fitch, who underlines how the” strong economic rebound “of Italy is” improving “the public finances.
The 2021 deficit forecast has been revised downwards to 8.9% of GDP from 11.4% at the latest rating review. Fitch estimates debt to be 5.5% of GDP in 2022 and 4.5% in 2023, thanks to the expiry of the measures to support the economy and “robust growth” in revenues. The debt-to-GDP ratio, according to the agency, is likely to drop below 154% of GDP by the end of 2021, from the peak of 155.6% reached at the end of 2020, and to around 150% of GDP by 2025. Fitch in his analysis he observes how “the Italian Parliament must elect a new President of the Republic by February 2022, when Mattarella’s seven-year term ends” since Prime Minister Draghi “is a potential candidate, the presidential elections could have a direct effect on the future of the government of national unity “. “The government – explains the rating agency – has an ambitious agenda of structural reforms, linked to the Recovery and Resilience Plan. Since the parliamentary elections are scheduled for March 2023 and the current government of national unity is ideologically supported by parties different, the implementation of the reform measures could slow down in 2022 and will be more uncertain after the parliamentary elections “.
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