Italy’s 2022 growth set to slow on war in Ukraine – Scope Ratings

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MILAN, March 25 (Reuters) – Geopolitical tensions stemming from the war in Ukraine will dampen Italy’s growth this year, ratings agency Scope said on Friday, echoing the views of other prominent observers.

The Russian-led invasion of Ukraine has inflated already sky-high energy prices, leading several think tanks to lower their forecasts for euro zone economies in 2022. 

Scope Ratings analyst Giulia Branz told Reuters the group’s growth projection for Italy this year now stands at around 3%, falling from the 4-4.5% initially forecast at the beginning of the year.

The German rating agency’s analysts now see the Italian deficit to gross domestic product (GDP) ratio in 2022 at 5.5%, up from the 4.8% estimated early in February, and public debt at 148% of GDP from 147%.

Early this week rating agency Fitch revised its growth forecast for Rome to 2.7% from 4.3% in 2022.

A Treasury official said on Tuesday the government is set to downgrade its growth outlook this year to around 3% from a previous 4.7% target. 

Branz said it was too early to quantify the impact of the Ukraine war on Italy’s credit rating – currently a BBB+ with a stable outlook – adding “it will depend on the development of the conflict, its duration and spread”.

Finally, according to Scope Ratings, the idea of issuing common euro zone bonds, an issue that the European Union will discuss in a few weeks, could have a positive impact on Italy’s sovereign rating. 

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