Italian Prime Minister Enrico Letta on Monday said it was possible to boost economic growth without increasing public debt as the key eurozone economy struggles with a lengthy recession.
Speaking ahead of a visit to Madrid, Letta also said Spain was "a natural ally to make Europe a continent that is always more attentive to growth and above all to social malaise".
Letta was expected to meet his Spanish counterpart Mariano Rajoy later on Monday as part of a tour of European capitals that has already taken him to Berlin, Brussels and Paris.
"We can boost growth without getting into debt. Other countries have shown this. We have become very indebted in the past and we have not had growth," Letta said at a press conference in Milan.
Asked about the challenges facing his newly formed grand coalition government, Letta said: "I never said it would be easy. On the contrary, I know very well that it is very difficult."
Italy's national statistics agency earlier Monday forecast that the economy will shrink by 1.4 percent this year -- drastically downgrading its earlier forecast of a 0.5 percent contraction.
It said the economy would grow by 0.7 percent in 2014.