ROME Italy's economy shrank more sharply than expected at the end of last year, extending the longest recession in 20 years and emphasising chronically low growth just 10 days before national elections.
Gross domestic product fell 0.9 percent in the fourth quarter versus the previous three months, while over the whole of 2012, the economy contracted 2.2 percent in workday-adjusted terms, national statistics office ISTAT reported.
A Reuters survey of 29 analysts had pointed to a fourth quarter GDP decrease of 0.6 percent.
The euro zone's third-biggest economy contracted for a sixth consecutive quarter, matching the length of a 1992-93 recession and surpassing the duration of its 2008-09 slump.
The larger German and French economies also shrank more than expected during the fourth quarter.
A Reuters poll taken last month predicts Italy, whose economy has grown on average less than its euro zone partners for more than a decade, will not pull out of recession until the second half of this year.
With a parliamentary election just days away, the data will could erode support for outgoing Prime Minister Mario Monti, who introduced severe austerity measures as a way to stave off a debt crisis.
To try to revive growth, all sides in a three-way race between Monti's centrist bloc, Pier Luigi Bersani's centre-left coalition and Silvio Berlusconi's centre-right are pledging ahead of the February 24-25 vote that they will cut taxes.
"After a figure as bad as this one, growth will be the hot issue for the rest of this election campaign," said Paolo Pizzoli, a senior economist at ING Financial Markets in Milan.
Fourth quarter GDP fell 2.7 percent year-on-year, ISTAT said, compared with forecasts in a Reuters poll that centred on a 2.4 percent decrease.
The shrinkage over the whole of 2012 compared with a 0.6 percent increase of the same index in 2011, ISTAT said. There was one more working day in 2012 versus 2011, ISTAT said.
The Italian government's forecast was for GDP to decline an unadjusted 2.4 percent. Unadjusted GDP data for 2012 will be released on March 1.
ISTAT gave no breakdown of GDP components with its preliminary estimate, saying only that activity in manufacturing, services and agriculture all dropped.
ISTAT said "acquired growth" at the end of the fourth quarter stood at -1.0 percent.
That means that if GDP posts no quarterly growth in each quarter of 2013, over the whole year it will drop 1.0 percent compared with the previous year.
(Editing by Ruth Pitchford)
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