Boston, MA -- (SBWIRE) -- 01/23/2015 -- Core Views

- Italy will return to modest growth in 2014 and 2015, although a weak labour market and ongoing contraction in credit growth will continue to impede a more robust recovery.

- We view positively the urgent structural reform agenda of new Prime Minister Matteo Renzi. However, we remain sceptical that he will be able to avoid the chronic instability, political infighting and rigid vested interests that that have in the past impeded reform efforts.

- Lack of significant structural reform in previous years seriously jeopardises Italy's long-term growth trajectory, and raises the risks that the public sector debt burden will become unsustainable.

- Even if reforms aimed at addressing Italy's decline in productivity growth and external competitiveness are passed, an ageing demographic profile will make debt consolidation efforts over the long term exceedingly difficult.

Major Forecast Changes

- No major forecast changes

Key Risks To Outlook

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- If Renzi's reform programme succeeds at rapidly pushing through key reforms in 2014 and 2015, we see upside risks to our growth forecasts over the medium and long term. Although these structural reforms would likely take several years before their full effect on the real economy is felt, immediate positive benefits could come in the form of rising investor and business confidence, lowering credit spreads and encouraging domestic firms to expand and invest.

- The Italian banking sector remains a key downside risk ahead of the European Central Bank's Asset Quality Review. Any major capital shortfalls uncovered could reignite the negative feedback loop between sovereign and banking sector risk, leading to another rapid loss of investor confidence in Italian assets. This would significant impede the government efforts to push through reform while staying within the European Union's budget deficit limits.

The Italy Business Forecast Report helps businesses with market assessment, strategic planning and decision making to promote growth and profitability in Italy and is an essential tool for CEOs, Chairmen, Finance Directors/CFOs, Managing Directors, Marketing/Sales Directors with commercial interests in this emerging market.

An influential new analysis of Italy's economic, political and financial prospects through end-2018, just published by award-winning forecasters, Business Monitor International (BMI).

Key Uses

- Forecast the pace and stability of Italy's economic and industry growth through end-2018.

- Identify and evaluate adverse political and economic trends, to facilitate risk mitigation.

- Assess the critical shortcomings of the business environment that pose hidden barriers and costs to corporate profitability.

- Contextualise Italy's country risks against regional peers using BMI's country comparative Risk Rankings system.

- Evaluate external threats to doing business in Italy, including currency volatility, the commodity price boom and protectionist policies.

The Italy Business Forecast Report by Business Monitor International (BMI) includes four major sections: Economic Outlook, Political Outlook, Business Environment and Key Sector Outlook.

Economic Outlook:

How will the Italy economic policy-making and performance impact on corporate profitability over 2014-2018?

BMI provides our fully independent 5-year forecasts for Italy through end-2018 for more than 50 economic and key industry indicators. We evaluate growth, and also forecast the impact of economic management.

Economic Outlook Contents

The Italy Business Forecast Report features BMI's forecasts with supporting analysis for 2014 through to end-2018, set against government views and BMI's evaluation of global and regional prospects.

Key Areas Covered:

Data:

- Full 10-year forecasts with data - for key macroeconomic variables including GDP (real growth and per capita), population, inflation, current account balance and the exchange rate.

- BMI's comprehensive Risk Rankings system - rates each country worldwide for economic and political risk, and rates the business environment, within a global and regional context.

Written Analysis:

- Economic Activity - real GDP growth, employment, inflation, consumption (retail sales and confidence).

- Balance of Payments - trade and investment, current and capital account.

- Monetary Policy - interest rate trends (bank lending and deposit rates) and inflation (producer price and consumer price).

- Exchange Rate Policy - currency controls, foreign investment flows, exchange rates and foreign exchange reserves.

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