S&P Global Ratings cut its growth estimates for Italy to 1,3% in 2018 (from 1,5%) and left those for 1,2 unchanged at 2019%. rating agency, "higher inflation, partly linked to the rise in energy prices, will weigh on consumption, especially since wage growth has yet to take hold". In the absence of structural reforms to support productivity, the agency "expects that growth will remain low".
The domestic political process "is the main risk for Italy's economic outlook", explains S&P. "The uncertainty about the government's willingness to continue fiscal consolidation has led to an increase in bond yields", a trend that could continue "for an extended period" and "translate into higher borrowing costs for the real economy and slow down growth”.
And again, continues the rating agency, "going forward, uncertainty about the political outlook and trade will probably lead to slower investment growth". However, industry and exports "should continue to benefit from solid global expansion, in the absence of an escalation of the trade war". S&P also points out that "structural weaknesses, especially low productivity, will remain a drag on growth." Finally, although Italian banks "have made some progress, the level of Npe (non-performing exposure) remains high" and "the result of the last elections suggests that it is unlikely that structural reforms will be implemented in the coming years".
