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Country Risk Service Italy 2nd Quarter Updater

  • ID: 3229990
  • Country Profile
  • Region: Italy
  • 20 Pages
  • The Economist Intelligence Unit
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Italy's sovereign risk score is at the less risky end of the BB band. This rating reflects the country's large public debt and modest economic growth, which has constrained revenue and curtailed plans to cut spending. The Economist Intelligence Unit expects the economic recovery to keep the budget deficit smaller than 3% of GDP in 2018-19 and to stabilise the public debt at around 130% of GDP. There is a downside risk that the deficit could breach the EU's 3% of GDP limit in 2019, if an incoming populist government proceeds to implement fiscal stimulus plans.

The score is 28 and the rating A. A better economic and institutional outlook for the euro zone has increased resilience to political risk and external shocks, while structural support for the currency comes from a large current-account surplus. We expect the euro to average US$1.21:EUR1 in 2018-19, after averaging US$1.13:EUR1 in 2017.

Banking risk is at the less risky end of the BB band. There has been gradual progress in dealing with the sector's weakness, but non-performing loans remain elevated, undermining already weak profitability, which leaves the sector vulnerable to a renewed loss of investor confidence.
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Country Risk Service Italy 2nd Quarter Updater

Risk assessment
Sovereign risk
Currency risk
Banking sector risk
Political risk
Economic structure risk

Definitions
Sovereign risk
Currency risk
Banking sector risk
Political risk
Economic structure risk
Overall country risk

Central scenario for 2018-22: Political stability

Central scenario for 2018-22: Election watch

Central scenario for 2018-22: International relations

Central scenario for 2018-22: Policy trends

Central scenario for 2018-22: Fiscal policy

Central scenario for 2018-22: Monetary policy

Central scenario for 2018-22: Economic growth

Central scenario for 2018-22: Inflation

Central scenario for 2018-22: Exchange rates

Central scenario for 2018-22: External sector

Key risk indicators

Ratings summary

Quarterly indicators

International assumptions summary

Economic structure

Public finances

Exchange rates, interest rates and prices

Financial sector

Current account

Foreign payment and liquidity indicators

External trade
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