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Italy's economy facing downgrades amid high inflation, energy costs

Friday, 04 November 2022 2:32 AM [ Last Update: Friday, 04 November 2022 2:32 AM ]

Max Civili
Press TV, Rome

Rating agency Moody's has recently changed its ratings outlook on Italy's banking system from stable to negative. Business conditions for Italy's banks are expected to further worsen in the coming 12 to 18 months, especially with regard to the quality of their loans and earnings.

The news broke at the heels of a series of downgrades in medium-term growth forecasts by the Bank of Italy, the National Bureau of Statistics ISTAT, employers association Confindustria and the Organization for Economic Cooperation and Development.

Italy's statistical agency ISTAT has predicted that the Italian economy will be flat in 2023 after growth of around 3 to 3.5 percent this year. Moody's forecast was even more cautious, predicting 2.7 percent growth for this year as a whole, and zero growth next year.

The challenges for Italy go well beyond economic growth. Prices have reached record highs lately with the country's annual inflation rate hitting almost 12% in October and energy costs still out of control.

In addition to that, the euro's weakness with respect to the American dollar has significantly eroded the purchasing power of the Italians.

On Thursday Italy's new far-right Prime Minister Giorgia Meloni travelled to Brussels to meet with the leaders of European Union institutions for the first time.

In the Belgian capital Meloni held two meetings with the President of the European Parliament Roberta Metsola and EU Commissioner for Economy Paolo Gentiloni in which her main ask was reportedly greater joint EU efforts to cope with energy costs.

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