Italy's uncertain election outcome has created a worst-case scenario for markets, raising concerns that the country's debt rating could be downgraded because urgent economic measures may be postponed or blocked, analysts said.
"This is a negative outcome," said Marco Valli, an economist at UniCredito SpA's UBM investment bank. "If there's a tie it increases the likelihood of a ratings downgrade, since agencies have said they wanted to see clear action on debt reduction."
Near-final returns yesterday showed Prime Minister Silvio Berlusconi's conservatives holding a razor-thin lead in the Senate and Romano Prodi's center-left winning the lower house by the smallest of margins.
Berlusconi's conservative allies held a one-seat advantage in the Senate, although the results for six seats elected by Italians abroad were still being counted yesterday morning.
A split between the two houses is likely to result in delays in passing economic measures, since there could be new elections. Even if one coalition controls both chambers, it would find it extremely difficult to pass legislation with such a slim majority, returning Italy to instability after Berlusconi's five years in power.
Ratings agency Standard & Poors had said early on Monday that the elections would have "no immediate effect" on Italy's rating, currently AA- with a negative outlook. But it added, "The long-term rating could be lowered this year if no signs of a sustainable and coherent debt reduction strategy emerge after the election."
The agency noted no coalition had presented any real budget details, adding: "It will become increasingly urgent for the new government to announce concrete measures to deal effectively with Italy's fiscal crisis."
Speaking before the vote, ING economist Paolo Pizzoli said he didn't expect S&P to take immediate action in the event of a tie. But he said if Italian President Carlo Azeglio Ciampi fails to find a swift solution to the deadlock "a decision by S&P cannot be completely ruled out."
If parliament ends up split between the two coalitions, the president could try to name a government of technocrats at least until another election is held. He could also seek to fashion a coalition of left and right, but considering the bitter divisions among Italy's political parties, that seemed unlikely.
Whoever wins, the next step will be to grapple with the budget. Italy has pledged to bring its deficit below 3 percent of GDP by next year, in line with the EU's Stability and Growth Pact that underpins the euro.
ROLLER-COASTER RIDE: More than five earthquakes ranging from magnitude 4.4 to 5.5 on the Richter scale shook eastern Taiwan in rapid succession yesterday afternoon Back-to-back weather fronts are forecast to hit Taiwan this week, resulting in rain across the nation in the coming days, the Central Weather Administration said yesterday, as it also warned residents in mountainous regions to be wary of landslides and rockfalls. As the first front approached, sporadic rainfall began in central and northern parts of Taiwan yesterday, the agency said, adding that rain is forecast to intensify in those regions today, while brief showers would also affect other parts of the nation. A second weather system is forecast to arrive on Thursday, bringing additional rain to the whole nation until Sunday, it
LANDSLIDES POSSIBLE: The agency advised the public to avoid visiting mountainous regions due to more expected aftershocks and rainfall from a series of weather fronts A series of earthquakes over the past few days were likely aftershocks of the April 3 earthquake in Hualien County, with further aftershocks to be expected for up to a year, the Central Weather Administration (CWA) said yesterday. Based on the nation’s experience after the quake on Sept. 21, 1999, more aftershocks are possible over the next six months to a year, the agency said. A total of 103 earthquakes of magnitude 4 on the local magnitude scale or higher hit Hualien County from 5:08pm on Monday to 10:27am yesterday, with 27 of them exceeding magnitude 5. They included two, of magnitude
CONDITIONAL: The PRC imposes secret requirements that the funding it provides cannot be spent in states with diplomatic relations with Taiwan, Emma Reilly said China has been bribing UN officials to obtain “special benefits” and to block funding from countries that have diplomatic ties with Taiwan, a former UN employee told the British House of Commons on Tuesday. At a House of Commons Foreign Affairs Committee hearing into “international relations within the multilateral system,” former Office of the UN High Commissioner for Human Rights (OHCHR) employee Emma Reilly said in a written statement that “Beijing paid bribes to the two successive Presidents of the [UN] General Assembly” during the two-year negotiation of the Sustainable Development Goals. Another way China exercises influence within the UN Secretariat is
Taiwan’s first drag queen to compete on the internationally acclaimed RuPaul’s Drag Race, Nymphia Wind (妮妃雅), was on Friday crowned the “Next Drag Superstar.” Dressed in a sparkling banana dress, Nymphia Wind swept onto the stage for the final, and stole the show. “Taiwan this is for you,” she said right after show host RuPaul announced her as the winner. “To those who feel like they don’t belong, just remember to live fearlessly and to live their truth,” she said on stage. One of the frontrunners for the past 15 episodes, the 28-year-old breezed through to the final after weeks of showcasing her unique