Italy’s credit rating was raised one notch to “BBB” by Fitch Ratings, which said the country’s high Covid-19 vaccination rates and an increase in public and private spending will help the economy expand more than expected.
The boost in rating reflects confidence in the unity government led by Premier Mario Draghi and its ability to wisely spend over 200 billion euros-worth of European Union (EU) recovery fund cash to create growth.
“So far this year, the Italian economy has proved fairly resilient to the global supply side disruptions and we expect this to continue,” Fitch said in a statement.
Economic output is expected to grow 6.3% this year, according to Italy’s national statistics institute. That’s after the country suffered a crushing decline of almost 9% in GDP last year due to a series of harsh lockdowns on people and businesses.
ECB bond purchases are also helping Italy to keep borrowing costs low. The Draghi government has wasted no time in taking advantage of favourable conditions and has begun spending the first instalments of EU money on key areas including infrastructure, digitalisation, green energy, education and health care.
Debt remains a problem, and the government has forecast it at a whopping 153.5% of economic output this year after spending large amounts to protect the economy from the worst of the pandemic fallout. Draghi has said Italy work on cutting debt in the next few years, though priority will be on investments for growth.