There would be no recovery for the Italian economy this year, considering an erosion of domestic demand and a worsening global economy, Italy's largest industrial association Confindustria said in a report released Thursday.

Not many had been predicting a recovery for Italy's beleaguered economy in 2012 before Confindustria's Thursday report, but details of the document help illuminate how weak the Italian economic outlook actually is.

The organization, which in June predicted that the Italian economy would shrink 2.4 percent in 2012, noted that industrial production fell in June 1.3 percent month-on-month, and production expectations and estimated future orders -- both important indicators of future growth -- also dropped.

According to the data, car registration, industrial orders, forecasts for general economic conditions, and consumer sentiment all worsened in the period.

The one positive indicator was export, which showed a seasonally adjusted increase of mere 0.2 percent in June, Confindustria said.

Confindustria predicted Italy's GDP growth would continue to weaken as the government battles to increase tax revenue and pay down debt amid a global economic slowdown.

"Domestic demand and production are suffering because of the crisis, but with most of the rest of the world in similar circumstances there is no hope to build a turnaround on exports," a Confindustria spokesman said. "Any recovery will have to wait until 2013 or perhaps even later."

Despite the bad news, financial markets in Italy -- and across Europe and even beyond -- rose Thursday based on reassuring comments from Italian economist Mario Draghi, president of the European Central Bank (ECB).

"Within our mandate, the European Central Bank is prepared to do whatever it takes in order to preserve the euro currency," Draghi said.

Draghi did not elaborate on how far the ECB was willing to go, or in which ways the bank's mandate applied in this case.
But analysts said markets interpreted that the ECB would intervene in bond markets if necessary to keep yields down for troubled economies like Italy and Spain.

In Italy, it sent the yield on the country's benchmark 10-year bond down to a yield of 6.06 percent, its lowest close since July 5.

The blue chip index, which had lost ground before Draghi's comments, surged 5.6 percent in heavy trading.

The strong stock market performances were echoed across Europe and even leapt across the Atlantic, pushing indexes higher on the New York Stock Exchange, where the Dow Jones Industrial Average was 1.8 percent higher in trading late in the day.

But Confindustria's spokesman said that notwithstanding the strong performance in markets Thursday the road ahead remained bumpy for the Italian economy.

"We are looking at the overall economy and not at conditions that might have an impact on the market's performance on a specific day," the spokesman said. "And the overall market conditions remain a source of worry."

 VietNamNet/Xinhuanet