By Adam Cadle
Italy should not be damaged from the economic crisis in the same way as the likes of Spain and Portugal, despite the country’s bond ratings being downgraded to Baa2 from A3, BlackRock has stated.
Speaking at the BlackRock investment outlook briefing yesterday, Richard Urwin, head of investments for the company’s fiduciary mandate team said: “What differentiates Italy from the rest in a positive way is that it has got a pretty small budget deficit, it has got a primary surplus and it has got a political system, which whilst the current incumbents are in power, has now got some reform momentum. This is more than can be said for Spain.”
He also accentuated that “Italy is quite a wealthy country” and therefore “it is easier to find the tax to fund the deficit.”
BlackRock Investment Institute’s chief investment strategist Ewen Cameron Watt commented that there is also a difference between the Italian and Spanish banking systems.
“The Spanish banking system has the problem that it cannot swallow a lot of Spanish debt whereas the Italian domestic banking system has become much more stable,” he said.