Standard & Poor's has reviewed Italy's sovereign rating up, bringing the long-term assessment from BBB to BBB+, while confirming its short-term rating to A-2. Outlook remains stable.
The rating agency's promotion came as a bit of a surprise at a complex time for the global economy, amid geopolitical pressures, a slowdown in the eurozone, and trade tensions. Yet, for S&P, the Italian fundamentals justify this step. As stated in the agency's note, "the revision reflects improvement in economic reserves, external and monetary policies of Italy in a context of growing global headwinds”, to which are added “the gradual progress made in the stabilization of public finances since the beginning of the pandemic”.
The fundamentals that convinced S&P
S&P's decision is based on a positive reading of the political stability and budget consolidation. Analysts point out that, while remaining high, the Italian public debt seems to be moving towards a phase of greater sustainability: "We expect that the Debt-to-GDP ratio to stabilize starting in 2028“, writes the agency.
La GDP growth in 2025 it is estimated at 0,6 %, an modest data but consistent with the international scenario, weighed down by the slowdown of the Eurozone and global political uncertainties. Despite the negative impact of trade tensions with the United States (with the suspension of duties "the impact on the Italian economy will be manageable"), the Italian economy benefits of accelerating public investments and of a European context where some partners – like Germany – are putting in place fiscal stimulus.
Giorgetti satisfied: “Rewarded for seriousness and responsibility”
The Minister of Economy's comment was not long in coming, Giancarlo Giorgetti, who saw in S&P's assessment an acknowledgement of the prudent line followed by the executive: "The seriousness of the approach of the Italian Government. Caution and responsibility will continue to be our line of action.”
Future scenarios: what could make the rating go up (or down)
S&P, while promoting Italy, maintains a vigilant posture. The dossier states that the agency "will take into consideration the possibility of lowering ratings if Italy's economic, external and budgetary positions were to deteriorate well beyond current forecasts". A concrete risk, for example, if the trade crisis with the United States were to worsen, undermining the confidence of families and businesses.
In reverse, "we would increase our ratings if Italy continued to reduce its budget deficit, putting public debt-to-GDP on a solid downward trajectory,” or if the country succeeded in relaunching potential growth above 1%, thanks to structural reforms.
Last week Fitch had confirmed BBB
S&P's upgrade comes just days after the decision to Fitch Ratings to confirm Italy's rating at BBB with positive outlook. A judgment that already represented a sign of confidence in the country. Fitch had highlighted the strengths of the Italian economy – “broad, diversified and with high added value” – and the institutional solidity guaranteed by belonging to the Eurozone.
Fitch, however, also highlighted the critical elements: very high debt and weak growth potential, two structural vulnerabilities that continue to weigh on the national credit profile.
