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DBRS Ratings confirmed the rating of the Italian Republic at BBB (high). At the same time, the agency confirmed Italy’s short-term foreign and local currency rating at R-1 (low). The trend of all ratings remains stable.
The Stable trend reflects Morningstar DBRS’s view that risks to ratings are balanced. According to the agency, “Italy’s recovery after the pandemic was stronger than expected and surpassed other large economies in the euro area.” It is specified that «the effects of a more restrictive monetary policy and a weaker external context are weighing on economic activity, but a gradual recovery in growth is expected with the improvement in the purchasing power of families and in financial and external conditions ».
According to DBRS «the implementation of Italy’s National Recovery and Resilience Plan (PNRR) should help mitigate the weakness of residential investments over the next two years, thanks to the gradual elimination of generous tax credits for home renovation (i.e. the Superbonus).
«The fiscal deficit – states the agency – reached 7.4% of GDP in 2023, well above the 5.3% of GDP forecast by the government, and the slippage is largely explained by a greater impact than provided for Superbonus tax credits. On the other hand, Italy’s public debt-to-GDP ratio fell faster than expected and stood at 137.3% of GDP in 2023 thanks to nominal GDP growth.”