Standard & Poor’s downgraded credit rating of Italy with one level, due to concerns about slower growth and rising debt, keeping still good prospects of the country. The agency lowered its long- and short-term sovereign credit ratings of the third largest economy in the euro area at levels respectively of BBB- and A-3 from BBB and A-2. S&P adjusted its forecast for growth in gross domestic product (GDP) of the country. Expected average growth of the Italian economy for the years 2014-2017 is now in the range of 0.5% to 1.2% compared to the current 1.0% and 1.9%.
“Persistently low inflation and challenging business environment continue to weigh on the economic outlook of Italy”, said the agency.
The credit agency also amended and its assessment in respect of the Italian public debt, already provides for an increase of 80 billion EUR by the end of 2017, or 4.9% of the estimated 2014 GDP. The new assessment sent the Italian rating one step above non-investment grade. However, according to S&P maintaining the stable outlook does not threaten the loss of Rome in the speculative category in the short or medium term.
“The stable outlook reflects our expectation that the government will gradually implement a comprehensive and potentially growth-enhancing structural reforms and budget”, indicated by the agency.
The S&P added that they expect the policy of the European Central Bank to continue to support normalization of inflation in the euro area in the long term will affect positively and Italy.