PM says Italy economy probably contracted in Q4 2018

The gross domestic product (GDP) data for the fourth quarter of 2018 is set to be released Thursday by the ISTAT national statistics office.

"I expect a further contraction of gross domestic product," Conte said at a business conference in Milan.

It would make it the second consecutive quarter of falling GDP -- after a drop of 0.1 percent in the third quarter -- and would tip Italy into recession.

"Analysts tell us we'll likely still suffer a bit at the start of this year," he said, pointing the finger at a slowdown in China and Germany which are hurting Italian exports.

"But all the elements are there to recover in the second half," he said.

A recession is likely to put pressure on the spending plans of Italy's populist government.

The coalition of the anti-establishment Five Star Movement (M5S) and the far-right League party was forced to water down its big-spending budget in December to avoid being punished by the European Commission and financial markets.

A slowdown will make it even harder to follow through on expensive vote-winning measures both parties promised their bases.