The current Italian government is composed of a coalition of extreme right-wing political parties led by Salvigny and a five-star movement of the Populist Party led by Di Mayo. Since the formation of the ruling coalition in June 2018, the poll support rate of the coalition party has risen to about 30%, while that of the five-star movement has been declining to about 17%.
Italys sovereign five-year CDS rose 19 BP from Thursday to its highest level in seven weeks. Similarly, the CDS of Unicredit, Italys largest bank with assets, rose 7 bp, while that of Intesa Sanpaolo rose 13 bp. Both CDS have reached their highest level since the end of June.
The Italian National Institute of Statistics (Istat) released data on July 31, local time, showing that Italys second-quarter gross domestic product (GDP) was flat with the previous quarter, at 0%. Economists had predicted a growth rate of 0.1%, the same as in the previous three months.
At present, Italys public debt totals 2.3 trillion euros ($2.62 trillion), which is about 132% of Italys GDP, substantially exceeding the 60% ceiling set by the European Union. Unlike Greece in the previous European debt crisis, Italys GDP accounted for 15.4% of the European Union, second only to Germanys 29.2% and Frances 20.5%. Therefore, the performance of Italys economy is crucial to the euro zone.
Since the 2008 global financial crisis, Italy has faced two recessions. At present, neither the left-wing nor the right-wing governments have significantly improved Italys current economic predicament. Although the current political instability in Italy has panicked the market, there is an old saying in China, whether it is extremely peaceful or not. At the European Central Bank meeting in July, Draghi said he would avoid another debt crisis and adopt easy policies if necessary, so the political turmoil in Italy could open the floodgates for Europe?
Source: Wind Information Responsible Editor: Yang Bin_NF4368