Fitch: Italy stable, but weak growth – The Republic

NEW YORK – Fitch affirms the ‘BBB +’ for Italy. The outlook is stable. The agency estimates for Italy a GDP growth of 0.6% in 2015 and 1% in 2016, confirming the country’s exit from recession. The growth, however, is “weak compared to other countries of the euro”, but takes place in a context of greater political stability that must be seized as an opportunity by the government to go ahead with the reforms. A boost to growth also could come from credit, which is however limited from 187 billion euro of suffering and impaired loans (data February 2015).

A support recovery Italian – writes Fitch – are “monetary easing ECB, the weak euro, the more confidence and low oil prices. ” The rating agency also stated that the Italian GDP is currently close to the value of the levels of 2000, or 9% below the peak of 2008. “The growth of nominal GDP will grow stronger gradually after being flat between 2010 and 2014 “.

The debt will rise slightly in 2015 133% after 132% in 2014 and” will remain above 120% until 2020, leaving Italy exposed to potential adverse shocks. ” “The rapid election of Sergio Mattarella to President of the Republic in February indicates that the Prime Minister Matteo Renzi has strengthened its position and that the prospects for political stability in Italy have improved. An opportunity for the government to continue on the institutional and structural reforms” then states Fitch, stressing that “the adoption of the Jobs Act is an important step in the agenda of structural reforms of the government and that, if successfully implemented, could have a positive impact on the growth rate of the medium term”.

Fitch forecasts are based on the fact that Greece remains in the euro. “The basic scenario is that Greece will remain in the euro, although Fitch admits that ‘Grexit’ is a material risk.” Although output would represent a shock significant for the euro area, Fitch does not believe that the situation could precipitate a crisis such as that seen in 2012. Fitch has also confirmed Spain’s rating to BBB + with a stable outlook, noting how both Madrid “rebounded strongly”.
Unchanged also B- Cyprus with Outloook positive.

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