S&P downgrades Italy to BBB-, one notch above junk

FXStreet (San Francisco) - Standard & Poor's downgraded Italy's sovereign rating to BBB- with a stable outlook from BBB with a negative outlook. The agency said the downgrade reflects "recurrent weaknesses in its real and nominal GDP performance, including eroded competitiveness."

S&P now estimates that the public debt of Italy will be €2.256 trillion by year-end 2017, which is €80 billion higher (or 4.9% of estimated 2014 GDP) than previously forecast.

The agency expects "Italian economy to exit recession in early 2015," while it forecasts 0.2% GDP growth in 2015. However, S&P expects Italian average real GDP to grow just 0.5% between 2014 and 2017, own from 1% previously estimated.