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#Italy outlook for 2019: halting growth amid political volatility. We expect the country's unstable politics and deteriorating economic conditions to intensify this year. Our free latest analysis: bit.ly/2MIHfz3, with @p_ceretti 
We expect Salvini to engineer a political crisis in an effort to trigger an early general election in late 2019 or (more likely) early 2020, at which it would be likely to emerge as the largest party at the head of a broad centre-right alliance. 1/
A key signpost to watch will be the European Parliament elections on May 26th. These would provide Salvini with an opportunity to deploy his anti-EU rhetoric, boost the Lega's support in opinion polls and build the party's profile at the national level. 2/
--> Important: Regional elections in 6 regions--February (Abruzzo, Sardegna), March (Basilicata), May (Piemonte) and November (Calabria, Emilia Romagna)--will also be signposts to watch as they will give the Lega the opportunity to consolidate its power across the country. 3/
The Lega is expected to make significant gains in Emilia Romagna, the historic heart of Italy's left-leaning 'Red Belt'. A victory in several regions would confirm the Lega's dominance throughout the country. 4/
The economy is another factor that might influence Salvini’s calculations. We forecast real GDP growth of 0.2% in 2019 and 0.4% in 2020, well below the govmt's projections. Deteriorating econ conditions will likely have a negative impact on the govmt’s approval ratings, 5/
Although an EDP has been averted in Dec, the EU institutions will be monitoring Italy’s fiscal performance closely in 2019. The fiscal outturn data for full-year 2018, expected in late March/early April, will be particularly closely watched. 6/
Any signs of slippage are likely to be met with stern warnings, which could unnerve investors and push up government borrowing costs once again. 7/
Since the formation of the govmt the Lega has been in the driving seat, eclipsing M5S in terms of popularity. M5S has made little opposition to the Lega's policy decisions and we believe that M5S will probably continue to appease the Lega in the near term. 8/
Nonetheless, the Lega and M5S have competing policy priorities, which will eventually create frictions within the government, especially if economic growth disappoints and the dispute with the EU on fiscal policy intensifies. 9/
