Italy's economy – Europe's third largest – is struggling. 

According to the Italian National Institute of Statistics, Italy's economy dipped for a second consecutive quarter at the end of 2018, shrinking by 0.2 percent. This officially put the country in a technical recession. 

Germany, one of Italy's' main trade partners, is also seeing an economic slowdown, with zero growth reported in its last quarter of 2018. The political climate in Rome may be causing part of the problem.

Chief economist at Confindustria, Andrea Montanino, said that Italy's internal issues are related to a lack of confidence. "Entrepreneurs don't have confidence now in economic policies of the current government and they are delaying investment or hiring," he said.

He also adds that the recession is not yet felt by Italian citizens, but they are unaware of what is happening. “Entrepreneurs usually see these things ahead of the public opinion and they are very worried," he said.

A professor of economics and Vice Rector for Research at the Luiss University, Fabiano Schivardi suggested that structural reforms are needed.

Schivardi explained that Italy's entrepreneurial system is still very much based on small firms, often unlisted and held or managed by family entrepreneurs.

"Now, with the challenge of globalization and innovation, we need firms that become more structured; they become larger, they become run by more professional managers," he said.

The Italian government is taking action. In March, a new program that aims to support people in need called the “Citizens' Income Program” will come into effect.

However, some critics stress the government also needs to take preventive measures and change the country's perception by reassuring the public debt or lowering the labor costs for the private sector that many argue are too high.

Markets reacted with little concern over a technical recession because the country's stalled growth has been apparent for some time.

But some business leaders such as Montanino are worried about the effects EU countries can have on each other. "There are risks – the slowdown in Europe is affecting Italy – we always have a gap with GDP Europe, and if Europe goes down, we go even lower, and then we enter into recession. So I'm worried about the external environment," he said.

Some EU officials, such as the French Economy Minister Bruno Le Maire, have also warned that an economic downfall in Rome will likely affect other EU countries as well.