ROME (dpa-AFX) - Fitch Ratings on Tuesday downgraded Italy's credit ratings citing the significant impact of coronavirus, or covid-19, pandemic on the fiscal position of the economy.
The ratings were lowered to 'BBB-', a notch above the junk status. The outlook was stable.
Fitch forecast the economy to contract 8 percent this year and the risks to the forecast are tilted to the downside as it assumed that the coronavirus can be contained in the second half of 2020, leading to a strong recovery next year.
However, in the event of a second wave of infections and the widespread resumption of lockdown measures, economic outturns would be weaker for 2020 and 2021, the agency observed.
The gross general government debt is forecast to rise to 156 percent of GDP by at the end of 2020, compared with the 'BBB' current median of 36 percent of GDP.
The agency lowered Italy's ratings ahead of its scheduled review in July.
The 'stable' outlook partly reflects the view that the ECB's net asset purchases will facilitate Italy's substantial fiscal response to the COVID-19 pandemic and ease refinancing risks by keeping borrowing costs at very low levels at least over the near term.
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