Italy: FdI Giorgia Meloni wins elections – UOB

Economist at UOB Group Lee Sue Ann comments on the general elections results in Italy.

Key Takeaways

“Far-right leader Giorgia Meloni of Brothers of Italy has claimed victory in the Italian election held over the weekend (25 Sep) and is on course to become the first Italian female prime minister. Turnout was lower than in the 2018 elections, at a historic-low of 63.91%. According to the Interior Ministry, Meloni’s alliance, which also includes Matteo Salvini’s League and Silvio Berlusconi’s Forza Italia, claimed about 43.8% of the votes.”

“Reaction in financial markets has been relatively muted. EUR/USD was little changed, plummeting briefly to 0.9565 in early Asian trade on Mon (26 Sep) before rebounding to close at 0.9606. Italian bonds fell on Mon, with the 10-year yield rising around 11bps to 4.470%, tracking the moves across the region. Milan’s FTSE MIB index rose slightly on Mon, bucking weaker stock markets in Europe on the news Meloni had a clear majority.”

“The election took place against the background of an energy crisis amid the ongoing Russia-Ukraine war, rocketing inflation and a likely recession in Europe, as well as questions about Italy’s future stance towards the EU. Based on previous experiences, the appointment of a cabinet is likely to take place no earlier than end-Oct. Of particular interest will be the appointment of ministers, particularly the finance minister position, which will be crucial in managing Italy’s economy.”