I think that domestic demand growth in Italy and positive outlook for the euro zone economy will be completely offset by political instability in the country. Political uncertainty has increased the potential for financial volatility and could harm the current moderate economic recovery, as well as further postpone of structural reforms at least in the short term. In spite of the possible support by the EU, Italy's high public debt and political instability will continue to give rise to concern for the major euro zone creditor countries, as well as put pressure on stability in the EU and financial sector.
Italy faces significant challenges this year and the next 2019. In most sources It is cited that Italy is the potential highest risk factor for the whole Eurozone. It is suffering from high level of public debt (140% of GDP as of Jan-2018), thus banking systems of Italy needs to be largely restructured (but impossible under Eurozone rules). Due to fundamental weakness of the economy, we can not expect any improvements in Mid-term horizon. Also, Political risks add more challenges, I mean that the leader of euro-sceptic Italy's Five Star Movement might come to power in May 2018, one of their hot idea is so-called Italexit seems to be likely, I mean the political actions about it, practically not (at the earliest in 2022). Also, as matter of fact at founding of Party in 2009 the party was anti-Vladimir Putin, but it has since become much more pro-Russia. More likely that after election the political process of independence and pro-Russia will be the same as in Greece. Over