Italy, suffering from one of the highest COVID-19 death rates in the world, crushing sovereign debt and a collapsing economy, took another blow as rating agency Fitch cut its credit rating to just above junk status.
According to the agency, which cut the rating to BBB−:
The downgrade reflects the significant impact of the global COVID-19 pandemic on Italy’s economy and the sovereign’s fiscal position. Fitch forecasts an 8% GDP contraction in 2020 and the risks to this baseline forecast are tilted to the downside, as it assumes that the coronavirus can be contained in 2H20, leading to a relatively strong economic recovery in 2021. In the event of a second wave of infections and the widespread resumption of lockdown measures, economic outturns would be weaker for 2020 and 2021.
The gross general government debt (GGGD) to GDP ratio will increase by around 20pp this year. Our baseline GGGD forecast is 156% of GDP by at the end of 2020, compared with the ‘BBB’ current median of 36% of GDP. According to our baseline debt dynamics scenario, the GGGD to GDP ratio will only stabilise at this very high level over the medium term, underlining debt sustainability risks.
24/7 Wall St.In 20 Years, I Haven’t Seen A Cash Back Card This Good
Credit card companies are at war, handing out free rewards and benefits to win the best customers. A good cash back card can be worth thousands of dollars a year in free money, not to mention other perks like travel, insurance, and access to fancy lounges. Our top pick today has pays up to 5% cash back, a $200 bonus on top, and $0 annual fee. Click here to apply before they stop offering rewards this generous.
Flywheel Publishing has partnered with CardRatings for our coverage of credit card products. Flywheel Publishing and CardRatings may receive a commission from card issuers.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
Our expert who first called NVIDIA in 2009 is predicting 2025 will see a historic AI breakthrough.
You can follow him investing $500,000 of his own money on our top AI stocks for free.