Global rating agency Moody's announced Friday that it affirmed Italy's credit rating at 'Baa2', while the country's outlook remained 'negative.'
Moody's emphasized that the Italian government has managed to stabilize the banking sector, adding '... risk of a deeper banking crisis with significant impact on the sovereign's balance sheet has been reduced.'
After six years of weak growth, Italian economy is seeing stronger growth, Moody's noted, but stressed that there are still risks.
'... the downside risks to Italy's creditworthiness remain elevated, leading the rating agency to maintain the negative outlook on the Baa2 rating,' it said.
'The rating would be downgraded if policies enacted or anticipated proved insufficient to firmly place the public debt ratio on a sustainable, downward trajectory in the coming years,' Moody's warned.
The rating agency added that if a credible structural reform agenda is not presented, this would put downward pressure on the country's credit rating.
Moody's, nevertheless, said that there could be an upgrade to the country's negative outlook in the future, adding 'Italy's growth prospects are likely to remain moderate over the medium-term.'
After growing only 0.9 percent in 2016, the agency forecasts Italy's economy to expand by 1.5 percent in both 2017 and 2018.
By Ovunc Kutlu in New York