Italy has achieved a major financial milestone as DBRS Morningstar upgrades its credit rating to ‘A low,’ citing economic resilience, fiscal discipline, and government stability under Prime Minister Giorgia Meloni’s leadership — marking a proud moment for Europe’s third-largest economy.

Italy has received a strong vote of confidence from global markets as credit rating agency DBRS Morningstar upgraded the country’s long-term sovereign rating from ‘BBB high’ to ‘A low’, highlighting the remarkable progress in strengthening its financial foundations and restoring investor trust.

The move marks Italy’s first rating upgrade since 2017, and comes as a significant validation of the country’s ongoing reforms, resilient economic structure, and the government’s credible approach to fiscal consolidation.

The announcement is being hailed as a clear endorsement of Prime Minister Giorgia Meloni’s economic policies, which have focused on balancing growth with responsibility while modernizing Italy’s financial and industrial sectors.

A Resilient Economy Regaining Momentum

DBRS Morningstar’s upgrade is grounded in several positive developments, including improvements in Italy’s banking system, external accounts, and fiscal management.

The agency noted that “cumulative improvements in Italy’s banking system and external accounts have significantly reduced structural weaknesses and improved its resilience since we last downgraded Italy’s credit rating in January 2017.”

This recognition is particularly significant given the global economic uncertainty and the challenges facing the eurozone. Italy — the third-largest economy in the European Union — has shown remarkable capacity to withstand market pressures, diversify its industrial base, and attract foreign investment.

The nation’s robust banking sector, now more capitalized and better regulated than ever, has also played a critical role in improving credit conditions and supporting small and medium-sized enterprises (SMEs), the lifeblood of Italy’s economy.

In addition, the country’s positive trade balance and stronger external position have bolstered investor confidence and helped stabilize the currency environment.

The upgrade also reflects optimism about Italy’s fiscal consolidation strategy, which aims to stabilize the debt-to-GDP ratio through prudent budgeting and efficient spending.

While public debt remains high — projected to reach 136.2% of GDP in 2025 — DBRS expressed confidence that the government’s disciplined approach will prevent unsustainable debt growth.

The Italian Treasury has forecast that public debt will stabilize after 2026, supported by reforms designed to boost productivity, streamline bureaucracy, and enhance competitiveness.

DBRS acknowledged that despite modest growth forecasts of 0.5% for 2025 and 0.7% for 2026, Italy’s policy consistency and institutional stability make its fiscal path credible.

Economy Minister Giancarlo Giorgetti welcomed the news, stating, “As a result of the constant work carried out over the last three years of government, Italy returns to the top flight with great pride.”

His statement encapsulated the sense of achievement shared by the Italian government and business community, which see the upgrade as both recognition and motivation to continue structural reforms.

Confidence in Leadership and Stability

The agency’s decision also reflects growing confidence in Italy’s political and economic stability under the leadership of Prime Minister Giorgia Meloni. Since taking office, Meloni’s administration has focused on a pragmatic blend of economic nationalism and international cooperation — prioritizing fiscal responsibility, social cohesion, and industrial growth.

DBRS highlighted that “the stability and track record of Italy’s government lend credibility to its medium-term fiscal consolidation plan.” This acknowledgment underscores the growing perception that Italy’s economic policymaking has become more predictable and effective, helping to reduce risk perceptions among investors.

The government’s continued commitment to European cooperation, participation in the EU Recovery and Resilience Facility, and emphasis on digital transformation and green investments are also contributing factors that strengthen Italy’s long-term outlook.

Financial markets reacted positively to the announcement, with analysts noting that the upgrade could lower borrowing costs for Italy and attract more international investment into its bonds and corporate sectors. A stronger rating often translates into increased capital inflows, greater investor confidence, and enhanced economic stability.

Moreover, Italy’s upgraded position may encourage credit agencies like Moody’s and S&P to follow suit in the coming months if fiscal indicators continue to improve. Analysts believe this momentum could further boost Italy’s financial credibility and allow it to play a more influential role within the European Union’s economic framework.

A Turning Point for Italy’s Economic Future

While challenges remain — including high debt levels and moderate growth — Italy’s new rating represents a turning point. It is a recognition that years of reform, resilience, and policy discipline have begun to pay off.

Italy’s success sends a broader message to global markets: that strategic reform, strong leadership, and consistent governance can transform even the most debt-laden economies into engines of stability and opportunity.

As Europe’s economic landscape continues to evolve, Italy’s progress stands as a symbol of renewal, confidence, and pride — signaling that the country is once again ready to lead from the front, grounded in fiscal responsibility and ambitious reform.

Australia, Britain and Canada are expected to see gradual rate cuts, while the European Central Bank is seen holding steady with inflation near its 2% target.

Global growth is holding up better than expected, but the full brunt of the U.S. import tariff shock is still to be felt as AI investment props up U.S. activity for now and fiscal support cushions China’s slowdown, the OECD said on Tuesday.

In its latest Economic Outlook Interim Report, the Organisation for Economic Cooperation and Development said the full impact of U.S. tariff hikes was still unfolding, with firms so far absorbing much of the shock through narrower margins and inventory buffers.

Many firms stockpiled goods ahead of the Trump administration’s tariff hikes, which lifted the effective U.S. rate on merchandise imports to an estimated 19.5% by end-August — the highest since 1933, in the depths of the Great Depression.

“The full effects of these tariffs will become clearer as firms run down the inventories that were built up in response to tariff announcements and as the higher tariff rates continue to be implemented,” OECD head Mathias Cormann told a news conference.

OECD’s 2025 Growth Forecasts Upgraded

Global economic growth is now expected to slow only slightly — to 3.2% in 2025 from 3.3% last year — compared to the 2.9% the OECD had forecast in June.

However, the Paris-based organisation kept its 2026 forecast at 2.9%, with the boost from inventory building already fading and higher tariffs expected to weigh on investment and trade growth.

“Additional increases in barriers to trade or prolonged policy uncertainty could lower growth by raising production costs and weighing on investment and consumption,” Cormann said.

The OECD forecast U.S. economic growth would slow to 1.8% in 2025 — up from the 1.6% it forecast in June — from 2.8% last year before easing to 1.5% in 2026, unchanged from the previous forecast.

An AI investment boom, fiscal support and interest rate cuts by the Federal Reserve are expected to help offset the impact of the higher tariffs, a drop in net immigration and federal job cuts, the OECD said.

In China, growth was also seen slowing in the second half of the year as the rush to ship exports before the U.S. tariffs recedes and fiscal support wanes.

Nonetheless, China’s economy is expected to grow 4.9% this year – up from 4.7% in June – before slowing to 4.4% in 2026 – revised up from 4.3%.

In the euro zone, trade and geopolitical tensions were seen offsetting the boost from lower interest rates, the OECD said.

The bloc’s economy was seen growing 1.2% this year – revised up from 1.0% previously – and 1.0% in 2026 – down from 1.2% – as increased public spending in Germany lifts growth while belt-tightening weighs on France and Italy.

Japan’s economy is expected to benefit this year from strong corporate earnings and a rebound in investment, lifting growth to 1.1% – up from 0.7% – before momentum fades and the expansion slows to 0.5% in 2026, revised up from 0.4%.

The OECD revised its growth forecast for Britain up to 1.4% this year from 1.3%, and kept its 2026 forecast unchanged at 1.0%.

Monetary Policy Expected To Be Loose

With growth slowing, the OECD said it expects most major central banks to lower borrowing costs or keep policy loose over the coming year, as long as inflation pressures continue to ease.

It projected the U.S. Federal Reserve would cut rates further as the labour market weakens — unless higher tariffs trigger broader inflation.

Australia, Britain and Canada are expected to see gradual rate cuts, while the European Central Bank is seen holding steady with inflation near its 2% target.

Japan, however, is expected to raise rates as it continues its slow withdrawal from ultra-loose monetary policy.