`Italy is in recession'

It's official, Italy, the euro zone's third-richest economy, is in recession. The value of the country's economy during the fourth quarter shrank by 0.7 percent from the prior three months when it contracted 0.2 percent, national statistics agency Istat said in a statement of preliminary numbers Wednesday.

Economists generally define an recession as two consecutive quarters of economic contraction.

Government officials and business trade groups had predicted that the economic crisis had pushed Italy into a recession, with Deputy Finance Minister Vittorio Grilli in December forecasting that economic output will shrink this year and stagnate in 2013.

Prime Minister Mario Monti - leading a group of technocrats, or non-political experts - took over the government in November when a spiralling debt crisis and scandals derailed Silvio Berlusconi's conservative ruling coalition and threatened the very future of the euro currency.

Monti has since pushed through a series of painful reforms that include tax hikes and make Italians work longer before qualifying for a retirement pension. Finance police have also made very visible raids against tax cheats.

The measures are expected to hit the Italian wallet, meaning that the economy can get worse before growth returns.