(Read more: 'Rome burns' as PM Letta wins confidence vote)
Third-quarter gross domestic product (GDP) data released in December showed economic output was flat compared to the previous three months -- signalling that Italy could be about to emerge from two and a half years of recession. But economists warned the economy has far to go.
In a note from HSBC setting out the bank's 2014 predictions for the euro zone, European economist Matteo Cominetta predicted that Italy's economy would grow but that "the lack of structural reforms means higher potential growth is unlikely."
"Consequently, we don't expect Italian growth to go beyond 0.4 percent and 0.6 percent in 2014 and 2015, respectively. Things could change should Mr Renzi become the next prime minister and implement his reformist agenda, but it is early to ponder on that possibility now," he said.
Nicholas Spiro, head of Spiro Sovereign Strategy, told CNBC that news that Italy exited its seemingly never-ending recession in the third quarter, "while symbolically important, is, to all intents and purposes, meaningless to the average Italian."
"Domestic demand is still contracting and the credit crunch continues unabated. The technical end of Italy's recession epitomises the state of affairs in the euro zone as a whole: it's not that the outlook is brightening but rather that it's simply becoming less bleak."
Indeed, Italy has a residual debt problem. The country has the second highest debt pile in the euro zone after Greece which is above two trillion euros -- around 133 percent of its economic output -- and a budget deficit hovering around the European limit of 3 percent, according to Eurostat.
"Italy's economy is likely to remain flat on its back in 2014, with little prospect of meaningful growth, to say nothing about structural reforms, any time soon," Nicholas Spiro commented. "The big improvement in Italy over the past year or so has been in the realm of investor sentiment, not in the real economy. This tale of two halves is likely to persist next year."
Speaking as the Italian Senate backed Italy's 2014 budget just days before the Christmas holiday, Prime Minister Letta appeared confident that the new year would herald a new start for the country and that a new generation of reform-minded generation of politicians would help Italy recover.
"I have been part of this change and I feel the full weight of responsibility. This generation will have the opportunity of changing Italy and I am convinced it can do it," he told an annual end-of-year news conference in Rome.
"We have the most complex part of this crisis behind us and we have to be in a position to take advantage of some important opportunities."
- By CNBC's Holly Ellyatt, follow her on Twitter @HollyEllyatt. Follow us on Twitter: @CNBCWorld