Rating, Italy put to the test of the agencies’ judgement: S&P’s verdict tonight

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In a complex context on a geopolitical level, with the intensification of tensions in the Middle East, and from a macroeconomic point of view, with global growth remaining below the historical average, as certified by the International Monetary Fund, the spotlight is on Italy , which awaits the judgment of the rating agencies. The first will be Standard & Poor’sFriday 19 April, then they will follow FitchMay 3, e Moody’sMay 31st.

Economic situation not critical

For our country the general situation does not appear critical: according to the IMF the Italian economy will grow by 0.7% in 2024 and 2025 (an estimate confirmed for the current year, while that for 2025 was reduced by 1.1% previously), while the Government last week estimated growth of 1% this year and 1.2% next. To make a comparison, in France a similar growth is expected in 2024 (+0.7%) but double in 2025 (1.4%), while Germany continues to struggle for which the IMF sees a modest +0.2 % (after -0.3% in 2023) but with a recovery to 1.3% in 2025.

Uncertain monetary policy

All this while the prospects for monetary policy remain to be understood, with the ECB appearing to be oriented towards cutting rates in June and the Federal Reserve which, in turn, is moving towards softening, and while at a political level attention is already to the important electoral rounds that will take place in Europe in June and in the United States, with the presidential elections, in November. These are crucial factors, which could have an impact on the global economy and that of various countries, including Italy.

Rating confirmed in October by S&P

Precisely for this reason it is possible that the rating agencies, as mentioned, called to give an opinion on our country, choose the path of prudence, waiting for the political and economic picture to be clearer. Moreover, last October, after the presentation of the 2024 budget, S&P did not ring any particular alarm bells, confirming Italy’s “BBB” rating with a stable outlook, while underlining that budget consolidation may be slower than expected . Furthermore, in January S&P spoke of 2024 as “a year of transition” for Italy, with the recovery of real income lagging behind the rest of the Eurozone, but recovering, and a structurally improved labor market, even if the productivity gap is closing slightly.

Fitch’s caution

A similar argument can also be made for Fitch, which in November left its rating unchanged at “BBB” with a stable outlook, underlining that the Italian economy is sufficiently “large, diversified and with high added value”, but the debt remains high, even if oriented towards stabilization. Furthermore, the rating agency had not raised doubts about Italian political stability, underlining that the Meloni Government was demonstrating better stability than its predecessors, despite having to deal with “considerable political pressure to maintain electoral commitments”.