The Eurozone economy contracted by 0.6 percent (quarter-on-quarter) in the fourth quarter according to the second estimate of the Gross Domestic Product (GDP) by Eurostat, the European Union's (EU) official statistics office.

The preliminary estimate of 0.6% was unchanged as the consensus expected. The economy contracted by 0.1% in the third quarter.

Data showed that household final consumption expenditure fell 0.4%, government spending dropped 0.1% and both exports and imports fell 0.9% from the previous quarter.

Only two of the 17 Eurozone economies, Estonia and Slovakia, grew in the last three months of 2012. In the larger 27-member EU, GDP fell 0.5% compared to the previous quarter.

Over the full year 2012, GDP fell 0.6% in the Eurozone and 0.3% in the EU27.

"This was the worst quarter in the recessionary cycle," said Saxobank economist Mads Koefoed. "The outcome of the Italian election increases uncertainty, but Eurozone growth should come back towards the end of this year."

Howard Archer, Chief European Economist at IHS Global Insight, said: "Downside risks to this forecast would increase if the uncertain Italian political situation increasingly unsettles the markets and causes a significant renewed intensification of Eurozone sovereign debt tensions."

JP

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