By Eric J. Lyman
ROME, March 20 (Xinhua) -- Ratings agency Moody's announced this week that it would delay its newest report on the Italian economy, evidence of the fluid nature of the country's medium-term economic prospects.
Moody's did not specify its reasons for the unusual delay. But Italian media said that it comes amid a swirl of developments that could have a significant impact on Italy one way or another.
Analysts told Xinhua the government's decision-making is being driven by political concerns ahead of elections for European Parliament in May.
The Italian Treasury is standing by its predictions that the country's economy will grow at least 0.6 percent this year, more optimistic than most rating agencies, investment banks, and multi-lateral groups.
Italy is expected to submit its first draft proposal for the country's 2020 budget next month, including a decision about whether it will be necessary to raise the standard value-added tax next year or not.
Not only do medium-term growth prospects depend on these kinds of developments, but so yields on government debt, which determine how much Italy will pay to borrow money.
"It would be hard to blame any entity trying to follow developments in the Italian economy to want to wait until things settle down a little," Hildebrandt and Ferrar economist Javier Noriega, said in an interview.
According to Marco Cecchi de'Rossi, a former managing director of the Italian division for Fitch, a major ratings agency, and now serving as non-executive director of the Cerved ratings agency, it is common for complex, industrialized economies like Italy's to go through periods of intense change.
"The most important thing is for an agency to look at the best data available, find the relevant trends in the data, and to pay attention to the actions taken not to promises and propaganda," Cecchi de'Rossi told Xinhua.
The outcome of ongoing negotiations on the 25-billion-euro (28.4-billion-U.S.-dollar) TAV high-speed rail project and the future of national air carrier Alitalia could result in significant new government expenditures while impacting the country's relations within the European Union.
The elections for European Parliament are likely to have an impact on the balance of power within the government of Prime Minister Giuseppe Conte, while growth prospects and the value-added tax will help determine budget deficit levels in 2020.
According to Riccardo Puglisi, a professor of political economy in the Department of Political and Social Sciences at the University of Pavia, Moody's delay makes sense.
"It's impossible for a ratings agency to respond to events in real time," Puglisi said in an interview. "They have to be cautious and avoid contributing volatility in markets."
It is not clear whether Standard & Poor's and Fitch, the two other global ratings agencies, will follow suit or delay their reports on Italy. Both are tentatively scheduled for release before the end of April.
