The financial rating agency Fitch lowered this Tuesday the financial rating of Italy, badly affected by the coronavirus pandemic. The rating changes from BBB to BBB-, with a stable outlook.
“The lowering (of the note) reflects the significant impact of the Covid-19 pandemic on the economy of Italy (…) Fitch forecasts a contraction of GDP by 8% in 2020”, the agency said in a statement. “The fundamentals of the Italian economy and public finances are solid”, responded in a statement the Italian Ministry of Finance in a statement, stressing that “The other rating agencies have adopted a more cautious attitude”. Standard and Poor’s thus maintained on Friday the financial rating of Italy, however severely affected by the coronavirus pandemic, highlighting in particular a “Diverse and rich economy” and “Lowest private debt levels in the G7”.
A heavy recession this year
According to the new finance law document, adopted Friday in the Council of Ministers, the third economy in the euro area will experience a heavy recession this year, with a fall in its Gross Domestic Product (GDP) by 8%. Consequence: the public deficit will climb to 10.4% of GDP, against 2.2% expected before the outbreak of the pandemic and 1.6% recorded in 2019. Public debt should it jump to 155.7% of GDP this year, against 135.2% expected before the epidemic, and 134.8% recorded in 2019.
The situation should nevertheless improve next year. In its latest growth forecasts, the International Monetary Fund expects GDP to shrink by 9.1% this year and a rebound of 4.8% next year. The peninsula is the European country most affected by the pandemic.