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Hello green shoots: Italy’s recession close to end

Kyoungil Jeon | E+ | Getty Images

Italy's longest post-war recession appears to be drawing to a close, with economists predicting that its GDP will finally return to growth in the last quarter of 2013.

The chief executive of Unicredit, Italy's largest bank, added his voice to the increasingly optimistic noises coming out of the country Wednesday.

Federico Ghizzoni told CNBC: "We believe that the fourth quarter this year will be the first quarter in Italy after many with a positive signal."

He added that the economy would start to see"some recovery next year" – with the proviso that it would be "not a fantastic one."

Read more: Unicredit profit beats forecasts

Strong exports have helped restore business confidence, although internal demand remains weak.

Yet the wounds caused by two years of shrinkage can still be seen on its economy. GDP is 8.8 percent lower than its pre-crisis peak, and its output losses during the credit crisis are some of the worst in the euro zone.

The nearly 29,000 people who applied for 200 jobs at an Ikea in Pisa are a speck in an ocean of unemployment.

And Italian politics continues to be characterized by its instability, with talk of another snapelection emerging after former Prime Minister Silvio Berlusconi's ban frompublic office was put under review.

Read more: What Berlusconi's latest actions mean for Italy

"We still believe that the economic outlook is far worse than the consensus forecast implies, implying that public debt will probably spiral significantly higher, Ben May, European economist at Capital Economics, wrote in a note.

"This, coupled with the delicate domestic political situation, suggests that market pressures on Italy could eventually increase, perhaps forcing the Government to seek some form of outside financial assistance."

Follow Catherine on Twitter: @cboylecnbc

Contact Europe: Economy

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