Rating, S&P's verdict on Italy tonight

In a complex context at a geopolitical level, with the intensification of tensions in the Middle East, and from a macroeconomic point of view, with global growth remaining below the historical average, as certified by the International Monetary Fund, the spotlight is on Italy, which awaits the judgement of the rating agencies. The first will be Standard & Poor's, on Friday 19 April, then followed by Fitch, on 3 May, and Moody's, on 31 May.

For our country, the general situation does not appear critical: according to the IMF, the Italian economy will grow by 0.7% in 2024 and 2025 (an estimate confirmed for this year, while that for 2025 has been reduced from the previous 1.1%), while the government last week budgeted a growth of 1% this year and 1.2% next year. By way of comparison, France is expected to see similar growth in 2024 (+0.7%) but double that in 2025 (1.4%), while Germany continues to struggle, for which the IMF sees a modest +0.2% (after -0.3% in 2023) but a recovery to 1.3% in 2025.

All this while the outlook for monetary policy remains to be understood, with the ECB seemingly oriented towards cutting rates in June and the Federal Reserve, in turn, moving towards a softening, and while at the political level attention is already focused on the important elections that will take place in Europe in June and in the United States, with the presidential elections, in November. These are crucial factors, which could have an impact on the global economy and that of the various countries, including Italy.

Precisely for this reason, it is possible that the rating agencies, as mentioned above, called upon to give an opinion on our country, will choose the path of caution, while waiting for the political and economic picture to become clearer. After all, S&P last October, after the presentation of the 2024 manoeuvre, had not sounded any particular alarm bells, confirming Italy's 'BBB' rating with a stable outlook, although it stressed that budget consolidation could be slower than expected. Moreover, in January, S&P had spoken of 2024 as 'a year of transition' for Italy, with real income lagging behind the rest of the Eurozone, but recovering, and a structurally improved labour market, even if the productivity gap is narrowing slightly.

A similar argument can also be made for Fitch, which in November had left its rating unchanged at 'BBB' with a stable outlook, emphasising that the Italian economy is sufficiently 'large, diversified and with high added value', but the debt remains high, although it is moving towards stabilisation. Moreover, the rating agency had raised no doubts about Italy's political stability, emphasising that the Meloni government was showing better resilience than its predecessors, despite having to cope with 'considerable political pressure to deliver on electoral commitments'.