Data confirms Italy is in recession

Italy is in recession, final data confirmed today. Italy's economy shrank 0.7 percent in the fourth quarter of 2011, following a 0.2 percent decline in gross domestic product in the third quarter.

Mario Monti, who rushed through a 33 billion euro austerity plan in December and is now working on reforms to boost growth, is due to meet Germany's Chancellor Angela Merkel tomorrow for talks in Rome.

Italy's national statistics office ISTAT said GDP fell 0.4 percent year-on-year in the fourth quarter, revising a preliminary estimate of a 0.5 percent fall.

The data lagged a euro zone average of -0.3 percent quarter on quarter and 0.7 percent year-on-year. Economic indicators are pointing to a further slowdown for most of 2012 in Italy, which has been the most sluggish economy in the euro zone over the last decade.

The Organisation for Economic Co-operation and Development said today there were tentative signs of economic improvement in the euro zone.

The Bank of Italy forecasts a 1.5 percent full-year contraction in 2012, far steeper than the government's official projection of -0.4 percent. (Reuters)