Fitch Affirms Italy’s ‘BBB+’ Rating with Stable Outlook

Fitch Ratings has affirmed Italy’s Long-Term Foreign-Currency Issuer Default Rating (LTFC) at ‘BBB+’ with a Stable Outlook, as announced on March 13, 2026. Fitch Ratings highlighted Italy’s large, diversified, and high value-added economy, alongside the institutional and financial stability derived from its membership in the European Union and Eurozone, as key supporting factors.

Key Rating Drivers

The rating reflects a balance between Italy’s economic strengths and significant challenges. While the country benefits from a robust economic base and EU membership, its very high level of public debt and limited medium-term growth prospects pose constraints on fiscal flexibility.

Public Debt Concerns

Fitch identifies Italy’s substantial public debt as the primary factor limiting its rating. The agency notes that this high debt level increases sensitivity to negative shocks affecting growth or interest rates. Debt-to-GDP stood at 137.1% in 2025, slightly above previous forecasts. Fitch expects debt-to-GDP to peak at 137.8% in 2026 before beginning a downward trend.

Deficit Reduction

Italy has demonstrated progress in reducing its deficit. The deficit-to-GDP ratio decreased to 3.1% in 2025, compared to 3.4% in 2024, aligning with both government expectations and Fitch’s forecasts. Further moderate improvements are anticipated, with the deficit projected at 2.9% in 2026 and 2.7% in 2027. Archyde reports these figures are consistent with a commitment to fiscal prudence and alignment with new EU tax frameworks.

Recent Rating History

This affirmation follows an upgrade from ‘BBB’ to ‘BBB+’ in September 2025, marking the first upgrade by Fitch since 2021. U.S. News & World Report noted this upgrade reflected improved fiscal performance and political stability. Prior to this, S&P Global Ratings raised its outlook to positive in January, and Moody’s upgraded Italy’s sovereign rating in November 2025 after 23 years.

Looking Ahead

Fitch anticipates a continued, gradual reduction in Italy’s deficit, supported by structural improvements in revenue and rigorous spending control. The agency’s baseline scenario projects at least a 1 percentage point reduction in debt-to-GDP annually starting from 2027. The Observatorial reports that analysts did not expect revisions to the rating following the September upgrade.