S&P up­grades Italy rat­ing on ‘firm­ing eco­nomic re­cov­ery’

Iran Daily - - Tse & Global Economy -

Stan­dard and Poor’s up­graded Italy’s sov­er­eign debt to ‘BBB/A-2’ with a sta­ble out­look, the credit rat­ings agency has said in a state­ment.

The agency cited rising pri­vate sec­tor in­vest­ment and em­ploy­ment, govern­ment deficit-re­duc­tion poli­cies, and bank re­forms as driv­ers of Italy’s eco­nomic re­cov­ery, Xin­hua re­ported.

“We are there­fore rais­ing our sov­er­eign credit rat­ings on Italy to ‘BBB/A-2’ from ‘BBB-/A-3’,” the agency said in the state­ment.

S&P an­a­lysts “ex­pect real gross do­mes­tic prod­uct growth this year at about 1.4 per­cent and to av­er­age 1.3 per­cent in 2018-2019”.

The govern­ment “will achieve this year’s bud­get deficit tar­get of 2.1 per­cent of GDP”, set­ting Italy’s very high govern­ment debt-to Gdp-ra­tio ‘on a de­clin­ing path’, ac­cord­ing to the state­ment.

Italy’s im­proved eco­nomic out­look is also down to “the res­o­lu­tion of the crises re­lated to Monte dei Paschi di Siena and two re­gional Veneto banks, and the quick­en­ing dis­posal of non­per­form­ing loans (NPLS) in the bank­ing sys­tem”, S&P said.

Ac­cord­ing to Bank of Italy data ob­tained from the Fi­nance Min­istry, gross NPLS held by Italy’s banks were re­duced from a to­tal of €200.9 bil­lion (about $233 bil­lion) in De­cem­ber 2016 to €172.8 bil­lion in Au­gust 2017.

Italy is slowly pulling out of two eco­nomic re­ces­sions that were sparked by the global fi­nan­cial cri­sis of 2008 and by the sov­er­eign debt cri­sis of 2010. The pro­longed cri­sis caused house­holds and busi­nesses to de­fault on their loans, which piled up on bank bal­ance sheets.

Be­gin­ning in 2015, the Ital­ian govern­ment strug­gled to re­form the coun­try’s bank­ing sec­tor to make it more cri­sis-proof, and to get rid of its NPLS.

On the down­side, S&P an­a­lysts pointed out that Italy’s econ­omy “re­mains un­syn­chro­nized with the rest of the eu­ro­zone, as re­flected in the depth and length of the 2008-2014 Ital­ian re­ces­sion”.

They also cited ‘per­sis­tent po­lit­i­cal un­cer­tain­ties’ ahead of the next gen­eral elec­tion, likely to be held in spring 2018.


Newspapers in English

Newspapers from Iran

© PressReader. All rights reserved.