Agencies give positive outlook on Italy's credit rating

As Morningstar DBRS reported on Friday, Italy's credit rating is trending toward a future upgrade. For now, it remains at BBB+, just one notch below its 2018 pre-pandemic rating. DBRS's optimistic outlook follows a recent upgrade to BBB+ by S&P Global Ratings.

Under Prime Minister Giorgia Meloni, Italy has cut its budget deficit to just above the EU’s 3% ceiling. Bloomberg notes that analysts expect the deficit to breach that limit again as soon as next year. The improvement marks progress in addressing Italy's chronic debt problem, though current liabilities still exceed 130% of the country's GDP.

With Trump's trade policies potentially impacting Italian exports and allies demanding increased defense spending, Finance Minister Giancarlo Giorgetti is warning of tough decisions ahead. The government is projecting a budget deficit of 3.3% for this year and 2.8% for 2026, Bloomberg reports.