(BRUSSELS) - The Italian economy will flirt with recession this year, growing a mere 0.5 percent, the European Commission forecast on Monday, trimming back a February estimate of 0.7 percent.

If the forecast proves correct, prime minister-elect Silvio Berlusconi faces the tough task of turning around a broadly weaker economy -- something the billionaire businessman had little success doing during previous stints in the job.

In its spring Economic Forecast for all of the EU economies, the commission said Italy started the year in a rut which the country is struggling to get out of.

"The estimated contraction of economic activity in the fourth quarter of 2007 implies a negative growth impulse into 2008," the European Union's executive arm said in the report.

"In addition, available indicators suggest that economic activity will remain subdued in the first half of the year."

The commission predicted that consumer spending would be sapped by inflation running at 3.0 percent and slumping confidence. while business investment would stagnate.

Despite the gloomy economic outlook, the commission predicted that the public finances -- which Italy has long struggled to keep under control -- would not deteriorate dramatically.

It forecast that the Italian public deficit would widen this year to 2.3 percent of gross domestic product from 1.9 percent in 2007 but that would still be well below an EU limit of 3.0 percent that Rome has struggled to respect in the past.

Italy is currently the target of EU legal action because of past violations of the 3.0 percent limit although the measure is likely to be dropped soon.

Berlusconi, a 71-year-old media magnate, won Italy's general elections by an unexpectedly wide margin this month, securing a third term as prime minister.

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