The eurozone economy shrunk by 0.3 percent in the last three months of 2011, official figures showed on Wednesday in a clear sign the debt crisis is pushing the 17-nation bloc towards recession.

The eurozone posted growth of 1.5 percent overall in 2011 but went into reverse in the fourth quarter after expanding by 0.1 percent in the third, according to Eurostat data agency.

It was the first time the eurozone contracted since the second quarter of 2009.

"The overall contraction in activity reflects the combination of uncertainty and financial stress related to the escalation of the eurozone crisis at the end of last year," said Nick Kounis, analyst at ABN AMRO.

While confidence indicators turned higher at the start of the year and market conditions improved, the austerity measures adopted across the eurozone are "likely to remain a major drag on economic growth," he said.

"We expect the economy to remain weak in the coming months, though recent data indicate that the downturn is unlikely to be deep or long."

The Eurostat figures are better than expected as analysts polled by Dow Jones Newswires forecast a fourth quarter contraction of 0.4 percent and growth of just 0.7 percent overall in 2011.

Germany, Europe's top economy, posted a contraction of 0.2 percent in the fourth quarter while its second-placed partner France surprised with growth of 0.2 percent, the figures showed.

Italy, the Netherlands and Belgium, meanwhile, entered recession after their economies shrunk in the third and fourth quarters.

Recession is defined as two consecutive quarters of economic contraction.

The Italian economy shrunk by 0.2 percent in the third quarter and 0.7 percent in the fourth, with the Dutch economy contracting 0.4 percent and 0.7 percent and Belgium down 0.1 percent and 0.2 percent.

Spain stagnated in the third and fell 0.3 percent in the last three months of 2011.

The Portuguese economy contracted in each quarter of 2011, shrinking by 1.3 percent in the final three months.

Figures for Greece were not available but Athens announced on Tuesday that its economy shrunk by 7.0 percent in the fourth quarter compared to the same period in 2010.

The GDP of the wider, 27-nation European Union, which includes Britain, also contracted by 0.3 percent in the fourth quarter but grew by 1.6 percent overall in 2011.

The British economy shrunk by 0.2 percent in the fourth quarter after growth of 0.6 percent in the third.

On a 12-month comparison, the eurozone's seasonally adjusted gross domestic product increased by 0.7 percent in the fourth quarter compared to the same period in 2010.

channelnewsasia.com