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Major Rating Factors
Strengths:
- High levels of per capita GDP.
- Strong household and corporate balance sheets.
- Limited external imbalances.
Weaknesses:·
- Weakening real and nominal growth prospects.
- What we view as significant political impediments to growth-enhancing reforms.
- High gross and net general government debt.
- Limited commitment to expenditure cuts under the current medium term fiscal programme.
Rationale
The lowering of the long- and short-term sovereign credit ratings on Italy reflects our view of the Italian economy'sweakening growth prospects and our view that Italy's fragile governing coalition and policy differences withinparliament will likely continue to limit the government's ability to respond decisively to domestic and externalmacroeconomic challenges.
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