Italian policy vacuum in an unfavourable economic context

The resignation of Prime Minister Mario Draghi is going to leave a policy vacuum in Italy. Snap elections are now very likely and will probably be held in October, around six months earlier than planned, leaving the country without a fully functioning government for the next few months, in an unfavourable economic context.

What you will learn:

• We were already forecasting a marked slowdown in the second half of this year, with GDP growth at only 1% for 2023.
• Draghi’s resignation will bring back some market turbulences. This could result in further negative shocks for the Italian economy, via lower confidence and even tighter banking credit standards.
• Moreover, depending on the outcome of the elections, it could result in financial markets questioning again the Italian fiscal sustainability.