Fitch Ratings has downgraded its rating on Italy’s long-term debt, citing the country’s huge debts, stagnant economy and divided politics.
Fitch cut the country’s rating from BBB+ to BBB, one notch above junk-bond status. Fitch says the outlook for the debt is stable.
Italy’s government debt equaled 132.6 percent of the country’s economic output last year, one of the highest figures in the developed world and well above its debt targets. Italian banks are struggling with bad loans, and bailouts are planned for three of them. The Italian economy is dragged down by an aging workforce and low productivity. Fitch expects it to grow just 0.9 percent this year, same as last year.
In December, Italian voters overwhelmingly rejected constitutional changes meant to end political gridlock.
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