Global Macro Service > Research Briefings > Italy

A thin line between sustainable debt and real vulnerability

Italy’s weak public finances keep it on the edge of fiscal sustainability. Yet our below-consensus GDP forecast does not suggest an imminent fiscal crisis. That’s mainly because existing Italian debt has a long maturity. But the economy is now much more vulnerable to risks, including rising debt costs, higher state spending and slower global growth. With the political situation set to remain highly uncertain, new elections in 2019 are a clear possibility.

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