Long before the coronavirus outbreak, Italy was one of the most indebted countries among all members of the eurozone. Now, Italy is rapidly losing its creditworthiness which is already weak enough. Fitch, one of the world’s leading rating agencies, has downgraded Italy’s credit rating to «ВВВ-» which is just one level above its junk rating. Although later, Fitch changed the country’s outlook to stable from negative, the projections still remain bleak. Given the deepening economic impact of the coronavirus pandemic, the situation may get even worse. Italy’s debt has reached its record high recently. So, analysts at Fitch believe that by the end of 2020 it may increase by around 20 percentage points to 156% of GDP. “The downgrade reflects the significant impact of the global COVID-19 pandemic on Italy's economy and the sovereign's fiscal position. According to our baseline debt dynamics scenario, the gross general government debt to GDP ratio will only stabilise at this very high level over the medium term, underlining debt sustainability risks,” Fitch warned. Notably, the agency’s rating for Italy came out ahead of schedule. Fitch decided not to wait until the next scheduled review date due to the statement of the Italian government.
