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Country Risk Service Italy 1st Quarter Updater

  • ID: 4753845
  • Country Profile
  • February 2020
  • Region: Italy
  • 20 Pages
  • The Economist Intelligence Unit
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The sovereign risk rating improved by 1 point, to 40, in our last assessment, remaining at the less risky end of the BB band. This reflects high public debt (135.9% of GDP), a stagnant economy and fiscal pressures. That said, easing governability risks and monetary stimulus by the European Central Bank (ECB) are lowering borrowing costs-the benchmark ten-year bond yield has fallen to just above 1%.

The currency risk rating remained at A and the score unchanged at 26. The rating is supported by the euro zone's economic and institutional framework, which improved from 2015, and its resilience to political risk and external shocks. Structural support for the euro comes from a large regional current-account surplus.

The rating remained at the less risky end of the BB band, and the score improved by 1 point, to 39. There has been 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 1st 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 2020-24: Political stability

Central scenario for 2020-24: Election watch

Central scenario for 2020-24: International relations

Central scenario for 2020-24: Policy trends

Central scenario for 2020-24: Fiscal policy

Central scenario for 2020-24: Monetary policy

Central scenario for 2020-24: Economic growth

Central scenario for 2020-24: Inflation

Central scenario for 2020-24: Exchange rates

Central scenario for 2020-24: 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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