Alessia Pierdomenico | Bloomberg | Getty Images
The Italian national flag, seen between statues, flies atop the Quirinale palace, the office of Italy’s president in Rome, Italy.
The rise of populist politics in Italy should still be front and center for investors in Europe, despite recent tensions in Spain with Catalonia possibly declaring independence in the coming days.
“Italy is not generating sustained growth and it still has the issue of bad loans,” a Brussels-based official, who preferred to remain anonymous due to his participation in key EU economic meetings, told CNBC over the phone.
“The euro zone is growing, even Greece is growing … But let’s not get carried away with the short-term success,” he added.
Broadly, the region has seen improvement since the days of the sovereign debt crisis of 2011. Growth has returned to the bloc, unemployment has fallen and business activity has expanded. But Italy is seen by European many economists as the biggest risk to the euro zone at the moment. The economy is set to grow below 1 percent this year and slightly above that threshold in 2018, according to recent forecasts from the European Commission.
Added to that, Claus Vistesen, the chief euro zone economist at Pantheon Macroeconomics, said that new elections in Italy are just around the corner.