Fitch downgrades Italy's rating to BBB+ after election deadlock

Fitch, one of the world's top-three credit rating agencies, said Friday it had downgraded Italy from 'A-' to 'BBB+' because of political instability and a worse-than-expected economic outlook, dpa reported. At BBB+, Italian sovereign debt still qualifies as 'investment grade,' according to Fitch's credit rating scale. In a statement, it explained its decision by stating that Italy was less likely to adopt much-needed economic reforms following 'inconclusive' general elections last week, in which the centre-left prevailed but failed to secure a parliamentary majority. Fitch noted also 'the risk of a more protracted and deeper recession than previously expected,' predicting that gross domestic product (GDP) would shrink by 1.8 per cent this year, far more than the 1-per-cent fall forecast by the European Union last month.