Fitch affirms A- rating for Italy

Fitch Ratings has affirmed Italy’s credit rating at A-, with a negative outlook due to risk of possible political and policy instability following upcoming elections.

“The current rating is based on the assumption that a stable new government will be formed shortly after the forthcoming elections and the government’s policies will be consistent with recent structural reforms, and further measures to enhance the economy’s competitiveness and growth potential will be adopted,” said Fitch in a statement.

Fitch also mentioned Italy’s progress in balancing public spending, saying the country is line to generate a surplus of 3% this year before debt payments, and Fitch expects the Italian economy to start its recovery in the second half of next year, mostly due to improving external demand.

Despite the recession triggered by pushing through sharp fiscal consolidation measures this year, Fitch said it believes Italy will avoid a self-reinforcing debt trap.

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