ROME Feb 8 Italy's economy shrank in the fourth quarter of last year, probably more steeply than the 0.2 percent decline in gross domestic product posted in the third quarter, a govermnent source told Reuters on Wednesday.
If the data is confirmed by national statistics office ISTAT when it issues Q4 preliminary GDP data on Feb. 15, it will mean Italy is officially in a recession which is widely expected to continue for most of this year.
"The fourth quarter was negative for Italy's economy, probably worse than the third," said the source, who asked not to be named.
Purchasing managers' indexes have indicated falling activity in both the manufacturing and service sectors in every month since last August.
The median forecasts in a Reuters survey of around 20 analysts conducted last month pointed to a 0.6 decline in GDP in both Q4 2011 and the first quarter of 2012.
The survey pointed to a full year GDP contraction of 1.2 percent this year, far worse than the government's official forecast of -0.4 percent. The Bank of Italy expects a decline of around 1.5 percent.
Activity at the start of this year has been further slowed by truckers strikes and unusually icy weather which have disrupted factory supplies.