Abstract
This work presents a country risk analysis in a particular country that has been recently found at
center of Europe's economic crisis. Indeed, this country is Italy, which both economically and
politically, has undergone a period of worsening along the recent years. Although Italy has a fairly
low budget deficit, structural issues such as low productivity have resulted in an economic crisis.
In addition, its public debt at 118 percent of GDP, is one of the highest in Europe.
The objectives of this work are to provide recent, short but concise information on country's
economic performance and analyse the immediate outlook. Then all possible implications that
foreign investors should take into account when running their businesses in Italy are briefly set
out. In this part, valuable information regarding country's affected sectors, insolvency trends,
expected default value, payments delays, warning signs and bank lending restrictions is also
given.
As a consequence of conducting country risk analysis, third parties usually may consider to take
measures to avoid conducting their businesses under excessive country risk. As an example, the
actions to be taken by a multinational insurance company are presented. To end up, this work
provides background information with regard to sovereign spreads and credit default swap
development. In addition, there is a SWOT analysis, a simple but useful framework for analyzing
Italy's strengths and weaknesses, as well as the opportunities and threats that Italy will have to
face.
