S&P Downgrades Italy to BBB-

Standard & Poor’s cut Italy’s sovereign credit rating on Friday from BBB to BBB-, just one notch above junk, saying weak growth and poor competitiveness undermined the sustainability of its huge public debt.

The downgrade is a blow for Prime Minister Matteo Renzi, who came to office in February pledging an ambitious reform agenda to lift Italy out of recession, but has seen the economy continue to shrink.

S&P said the new BBB- rating carried a stable outlook. It forecast Italian economic growth would be just 0.2 percent in 2015 and would average 0.5 percent in 2014-2017.

As recently as June, the agency had confirmed Italy’s BBB rating and forecast average growth of 1.0 percent over the three-year period.

Italy’s economy is expected to shrink in 2014 for the third straight year.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza