Italy's Prime Minister Matteo Renzi must rapidly enact labour reforms and clean up corruption to boost weak growth in the eurozone's third-biggest economy, the International Monetary Fund said Tuesday.
Despite a pickup in private consumption and exports, "the recovery remains fragile and unemployment unacceptably high, highlighting the need for bold and quick policy actions," the IMF said in a report after a visit to Italy.
Italy's economy shrank by 0.1 percent in the first quarter of 2014 after officially pulling out of its worst post-war recession at the end of last year.
Official data, including a rise in industrial production, showed growth should pick up again in the second quarter.
Renzi -- who became premier in February -- has pledged repeatedly to modernise Italy, clean up its political system and tackle record unemployment, though few have seen the light of day.
"Delivery of real change is now crucial for strengthening confidence and support for reforms," the IMF said.
The IMF also highlighted "fiscal rebalancing to allow lower tax rates and increased productive spending," as key to turning around Rome's fortunes.
The international body said reforming government policy on labour and competition, providing more support to small and medium enterprises and cleaning up the judicial system would all help to boost growth.
On workers rights, the IMF said Italy's temporary roles, which have been criticised for stripping workers of their rights, should be replaced by contracts that increase job protection for workers.
Reforms from 2012 to clean up corruption have helped but "could be further improved, notably by criminalizing the false accounting offenseand changing the limitation period provisions," it added.
The body also praised Italian banks for making progress in precognizing losses, reforming governance and raising private capital, but warned on the slow pace of write-offs.