S&P: "Italy's outlook can improve with structural reforms"

“The negative outlook on Italy's rating indicates that we are still uncertain as to whether the economic and economic policy trend we are seeing will hold – reads the report -. But if the current coalition government were to implement pro-growth structural reforms, especially labor reforms, Italy's growth potential could improve.

THEoutlook on Italy's BBB rating could improve in case of an acceleration on the front of the reforms. The American agency writes it Standard & Poor's in a report dedicated to the risks on European sovereign ratings in 2014, underlining however that at the moment the prospects for our country remain negative due to the uncertainties on the improvement trend of the economy and doubts on the trajectory of the public debt.

“The negative outlook on Italy's 'BBB' rating indicates that we are still on unsure whether the economic and economic policy trend we are seeing will hold – reads the report -. Despite some evidence of an imminent economic recovery and fiscal easing, we believe that weak labor demand, combined with tight credit conditions, will limit Italy's average GDP growth to 0,5% annually between 2014 and 2016. XNUMX”.

The latest estimates released by the agency indicate a growth in the Italian GDP of 0,4% in 2014 and 0,9% in 2015. For this year, the latest official government estimate (reiterated a few days ago by the Minister of the Treasury, Fabrizio Saccomanni) expects growth of 1,1%, against the approximately +0,7% on which the main national and international forecasters converge (including Istat).

“If the current coalition government were to achieve pro-growth structural reforms, especially labor reforms, Italy's growth potential could improve – continues S&P -. In the absence of a new electoral regime, the forthcoming elections will be held under a highly proportional system, which could imply further fragmentation of coalitions and potentially a weak political result”.

In the latest pronouncement on Italy, S&P explained that the country's rating could undergo a new cut if the government is unable to implement the reforms and prevent a deterioration beyond the forecasts of the public finance indicators. On the other hand, concludes S&P in the report published today, "we could revise the outlook to "stable" if the government implements the structural reforms of the labor, goods and services markets, which push the Italian economy to a higher level of growth". The agency's next pronouncement on Italy's sovereign rating is scheduled for 6 June.