Moody’s Eyes Renzi Referendum as Italy Stuck on Low-Growth Path
(Bloomberg) -- Any downward pressure on Italy’s rating would come from fewer reforms or higher prospect for debt, Sarah Carlson, senior vice president at Moody’s, says in a press briefing in London.
- The Italian constitutional referendum matters in terms of how useful it could be to implement reforms
- What’s important for Italy is what is being done to be able to address slow growth along with the debt trajectory, as those remain the country’s credit fragilities
- Italy has been stuck in a weak-growth pattern for a long period of time and there are a number of reforms that would make a significant difference for the economy such as the competition law; that would be positive for growth and debt
- Says “Italy is sailing into the wind because it also faces very significant demographic pressures” where the size of the working age population could be smaller in the future
- Given the structure of the Italian Constitution, it’s a very difficult process to get the reforms through
- Italy’s political landscape has always been highly fragmented, so this is nothing new
- PM Renzi isn’t as popular as he once was; he linked a referendum on basically the powers of the senate to the popularity of his entire govt
- Referendum is now a “debate” between “broader satisfaction with the Renzi government” and the specific constitutional issue
- Once the referendum will be held, there will be the need to understand what is going to happen to reform process
- NOTE: Fitch Sees Risks to Italy Rating From Renzi Referendum; read more on this topic here: The End for Renzi? Goldman Sachs and Morgan Stanley Are Divided
Alert:
HALISTER1Source: BFW (Bloomberg First Word)
People Sarah Carlson (Moody's Investors Service)
Topics Italy Constitution Change
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