Support Marketplace

Italy's political worries scare investors

Italian Prime Minister Mario Monti speaks with traders while visiting the floor of the New York Stock Exchange on February 10, 2012 in New York City. There are now renewed fears of Italy or Spain defaulting after months of relative calm in the markets.

Italian prime minister Mario Monti originally came to power as part of a government of nonpartisan experts who could steer the country out of its fiscal crisis.

But his efforts have lost the critical support of the political party formerly in control -- a party still headed by former Italian prime minister Silvio Berlusconi.

Before the planned elections early in 2013, there is likely to be more turbulence and turmoil, says Julia Coronado, chief economist at BNP Paribas.

"I think we'll end up with a centrist goverment," she says, "but there's going to be a lot of bumps along the way."

Italy -- Europe's 4th largest economy -- has been relatively disciplined in terms of the broader situation in Europe, in large part because of Monti's leadership, points out Coronado.

"That's been the good news; it's kept them off the radar screen," she says. "But that austerity and those reforms come with a lot of social resistance and upheaval, and that's what we're seeing play out in the politics."

About the author

Jeff Horwich is the interim host of Marketplace Morning Report and a sometime-Marketplace reporter.

Comments

I agree to American Public Media's Terms and Conditions.
With Generous Support From...