MENU
EU Economics

Italian economy so damaged that even SPAIN is considered a better bet

SPAIN’s economy is now though to be safer than Italy, as the fortunes of the two eurozone states from the financial crisis couldn’t be more different.

italy spainGETTY

Italy and Spain have had differing economic outcomes


The two countries both had to be bailed out by the eurozone at the height of the bloc’s financial crisis in 2012.But since then Spain’s banking sector has enjoyed a relatively stable recovery – while Italy looks more troubled than ever.

Experts say Spanish lenders are now helping, rather than hurting, the economy.

The country has become the eurozone’s fastest growing major economy, expanding at a rate of 0.7 per cent in the second quarter of 2016.

The situation is in direct contrast to Italy, where it was revealed growth between April and June ground to a total halt.Worries about Italy’s banks have ramped up since the start of the year – and become even worse since Britain vote to leave the European Union (EU).

The lenders are weighed down by debts of around £270billion of bad loans – or a third of the eurozone’s total.

The difference in market perspectives of the two countries can be seen through the yields of two-year government bond yields – which shows how much trouble investors think governments will have to repay future debts.

At the start of the year, the countries were judged to be equally risk, but since then yields on Spain have fallen as low as -0.2 per cent, while Italy is sitting closer to -0.05 per cent.

Another measure, the price of five-year credit default swaps in Spain are far lower.In the coming months, Spain’s economy is expected to keep improving, while Italy’s is set to get worse.

Santiago Fernandez de Lis, analyst at BBVA, told the Financial Times: “In Spain you had a property bubble that caused big problems in the construction and real estate sector but that was very concentrated.

“In Italy you see more of a long-term problem that is linked to the lack of economic growth over decades.”

http://www.express.co.uk/finance/city/699455/Italian-economy-so-precarious-that-even-SPAIN-is-considered-a-better-bet

Leave a Reply

Help put the World to rights and leave a Comment

  Subscribe  
Notify of
MENU
Powered by: Wordpress
%d bloggers like this: