Italy's president dissolves parliament, clearing way to elections in 2018

"The gap between our growth rate and that of the euro-zone has more than halved in these last 5 years (since the beginning of the legislature)," he added.

Gentiloni urged all political forces and the next parliament "to not waste such efforts, nor put the achieved results at risk: the next legislature should not lack ambition, nor (the will of) reforms."

Yet, the country may face a period of political instability. The next vote will be the first test for a new electoral law approved in October, which introduced a hybrid system under which one-third of parliament is elected via first-past-the-post, and two-thirds by proportional representation.

The current political landscape is also fragmented, leading many analysts to expect a hung parliament as the most likely outcome of the elections.

Indeed, an average of opinion polls carried out in mid December showed anti-establishment Five Star Movement (M5S) on the lead with about 27.5 percent, followed by ruling, center-left Democratic Party (PD) at 24.3 percent.

While center-right Forza Italia (FI) party of former premier Silvio Berlusconi would poll third at 16.1 percent, and right-wing, anti-immigration Northern League would gather 13.7 percent.

Considering such projections to be right in next March, none of the major parties were strong enough to govern unilaterally without forming a coalition.

Although on the rise, the populist M5S was seen at a disadvantage for its repeated refusal to forge electoral alliances. Its candidate for prime minister Luigi Di Maio, however, lately suggested such strategy might change, in case of a positive electoral result.

With the center-left political area deeply divided and the PD losing ground in opinion polls, a center-right coalition of Berlusconi's FI, the Northern League and small far-right Fratelli d'Italia (Brothers of Italy) party might have the best chances to win a majority of seats.

But analysts believe that the future government might not be stable as previous ones with a hung parliament.