The Italian employers' federation (Confindustria) says the country’s struggling economy is faced with "heightened uncertainty" and diminishing production.
The report, entitled “The Challenges of Economic Policy,” was published on Thursday, saying economic growth in Italy will remain depressed for the next two years.
"The Italian economy remains in a deep recession and signs of reversing the trend are not strong," said the study carried out by Confindustria's research center.
“Uncertainty remains high," it stated, highlighting the challenges ahead of the country regarding the unclear electoral system to be used in the next polls.
Confindustria also predicted worse GDP numbers for 2013 than any previous report, lowering a drop of 0.3 percent forecasted in June to 0.6 percent.
"Up to now the consequences of the crisis on Italian GDP, down 6.9 percent since its peak in the third quarter of 2007, have had worse effects than the First World War," it said.
The report came as unemployment in Italy hit a new record high of 10.8 percent in June -- the highest rate since Italy joined the European Union almost 13 years ago.
Italian Labor Minister Elsa Fornero has also admitted that the country is being badly affected by the economic downturn.