Italy confirms it is in recession

Italy has the third-biggest economy in the eurozone after those of Germany and France.

On a 12-month basis,Italian gross domestic product (GDP) slipped by 0.4 per cent in the final three months of 2011,slightly better then an initial estimate of minus 0.5 per cent,figures from the Istat institute showed.

For 2011 as a whole however,business activity gained 0.5 per cent,Istat said,revising an earlier estimate of 0.4 per cent growth slightly upwards.

Italy is burdened by massive debt of 1.9 trillion euros,equivalent to 120.1 per cent of GDP,and has drawn up several austerity plans since 2010 to reassure financial markets.

The government forecasts an economic contraction of 0.4 per cent for 2012 as a whole,mainly owing to austerity measures that curb domestic consumption and investment.

The European Commission believes that Italian business activity will shrink by 1.3 per cent his year however,while the International Monetary Fund has forecast a decline of 2.2 per cent.