Further contraction is expected for the economy of Italy. Additionally, the country's debt and joblessness rates will balloon, said an industry body on Thursday.

Confindurista, the Italian think tank who conducted the analysis, predicted that the country's gross domestic product would shrink by 1.9% this year. This forecast is much larger than a previous 1.1% decline. Public debt is also seen to increase as the regime of Prime Minister Enrico Letta struggles to balance tight finances on an economy which currently suffers its longest recession since the world war.

The industry body also said that Italy will recover "very slowly" in the last quarter of this year, and that the economy will stabilize by next year. The previous growth forecast of 0.6% was cut down a notch to 0.5%.

"There are certainly a series of signs that indicate we have hit bottom: car registration figures, some indicators on the evaluation of families and businesses," Luca Paolazzi, head of the association's research unit, said in an interview.