Italy, the euro-zone’s third-biggest economy and currently in recession, is shifting priority from austerity to growth after rushing through a series of reforms aimed at cutting its 1.3-billion-euro debt.

“The effects of the fiscal consolidation measures as well as strained financial and credit market conditions will likely result in negative GDP growth in the first half of this year,” Grilli said in a statement.

“Nevertheless, there are signs of improvement suggesting that a moderate recovery could start already in the third quarter,” he said, after a meeting of the International Monetary Fund’s governing panel.

The government has forecast a deeper contraction of 1.2 percent this year and an expansion of 0.5 percent in 2013. It had originally seen a recovery by the end of the year.

Europe was pressed by other world powers on Saturday to take strong measures to fix its debt-burdened economy and bolster its fragile growth recovery. “There has been a big discussion about how to make it possible to have fiscal strengthening and growth,” Grilli said at a news conference.

“But the timing (for these actions) is not the same,” he said, adding fiscal tightening comes first.

Grilli said the “acute” moment of the crisis is over but Europe is still seen as a “center of risks” that can lead to financial market turbulence.

He said inflationary expectations remained “well-anchored” despite the recent increases in oil prices.

“Thus, the monetary stance in major advanced economies should remain accommodative so as to support the still-fragile recovery,” he said.

Italy pushed through a 30-billion euro austerity plan at the end of last year, partly prompting this year’s recession.

The government has then reformed its pension system and is pushing through a labor market reform.

Italy expects to balance the budget by 2014.