Europe economy: Recession hits Italy and Netherlands

Two of the eurozone's biggest economies have fallen into recession, according to the latest economic figures.

Italy and the Netherlands both saw their economies shrink by 0.7% in the fourth quarter, the second consecutive quarter of economic contraction.

Germany had its first negative quarter since 2009 with a decline of 0.2%, compared with the previous quarter.

But in France there was surprise growth of 0.2% at the end of last year, attributed to healthy export growth.

Overall the 17 nations that make up the eurozone saw economic activity shrink 0.3% in the fourth quarter. By comparison the United States reported growth of 0.7%.

The eurozone has not slipped into recession as it reported growth of 0.1% in the third quarter.'Better than feared'

For 2011 as a whole, the French economy grew by 1.7% and Germany 3%.

Europe's debt crisis has already pushed Greece, Portugal and Belgium into recession, defined by two consecutive quarters of contraction.

Economists forecast that Germany is likely to avoid that scenario and say the latest growth figures could have been worse.

"This is better than feared after retail sales and industrial production turned out badly in December. The decline is due to the euro crisis. It caused a drastic loss in confidence among companies and consumers." said Christian Schulz, an economist at Berenberg Bank.

"Action from the ECB and the government has restored confidence. There is hope that we will emerge quickly from the economic dip. We expect growth again in the second quarter at the latest, provided that the euro crisis remains under control." he said.

The French growth figures were better than forecast, with many analysts having expected the economy to have contracted in the fourth quarter.

"Each of the three main components of the economy - foreign trade, household consumption and investment - had a positive contribution in the last quarter of 2011." said Finance Minister Francois Baroin in a statement.

At the time the agency blamed Europe's debt crisis and the failure of Europe's leaders to tackle the region's problems.

European growth rates
	4th quarter	3rd quarter	2011
Eurozone	- 0.3%	0.1%	1.5%
Germany	- 0.2%	0.6%	3.0%
France	0.2%	0.3%	1.7%
Italy	- 0.7%	- 0.2%	0.4%
Austria	- 0.1%	0.2%	1.2%
Netherlands	- 0.7%	- 0.4%	1.3%