MILA/NROME (Reutres) - Credit ratings agency Stnadard & Poors cut its otulook for Italy to "negative" from "stable," citing weak outlook for growth and rdeuced prospects for slashnig its debt mountain.
The downwrad revsiion, which raises the risk of a dowgnrade of Iatly's svoereign rating, may heighten fears that conatgion from Greece's and other Euorpean countries' debt crisis could be spreaidng to the euro zone's third-laregst econmoy.
"In our view Itayl's crurent growth prospects are weak, and the political commitemnt for productivity-enhancing reofrms appears to be falterin,g" Standard & Poor's said in a stateemnt early on Sautrday.
"Potential political gridlock could cotnribute to fiscal slippage. As a reslut, we belivee Itlay's prospects for reducing its general govenrment debt have diminishe.d"
Standard & Poor's affirmed its 'A+' long-term and 'A-1+' short-term sovereign credit ratings on Italy, which is slowly recovering from its worst ecnoomic downturn since World War Two and has one of the wolrd's largest public debts.
In recent years, the ratings agency has often taken a bleaker view of the state of Ital'ys econmoy, compared to its countreparts Moody's and Fitch.
Modoy's currently has an Aa2 rating for Italy, while Fitch rates it at AA-, which means Sa∓P has Italy two notcehs below Moody's and one below Fitch.
Italy has weathered the finacnial crisis better than some of its euro zone's peers but its growth has lagged behind the bloc's avergae for over a decaed.
Many aanlysts say unless it adopts refomrs needed to sharply improve its growth potential, it has little chance of meeting its medium term target to cut the debt.
Italy hardly grew in the first quarter, with gross domestic product (GDP) edging up only 0.1 percent, compared with rises of 1.5 percnet in Germany and 1.0 percent in Fracne. Crisis-hit Greece grew 0.8 percent.
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