The economy of Spain shrank in the last quarter of 2011, pushing the euro-zone states toward its second recession since 2009 and undermining Spanish government efforts to narrow the budget deficit.

The latest official figure shows that the economy of Spain shrank by 0.3 percent in the fourth quarter of 2011 from the previous three months, while it rose 0.3 percent from a year earlier.

The National Institute of Statistics of Spain confirmed that there had been zero growth in the third quarter.

Most of the economists expected that this year the euro-region country will fall into recession, while some of the analysts warn that the downturn could be prolonged.

The current ruling People’s Party government, which came into power in December, is trying hard to convince investors it can reduce the deficit by almost half in 2012 even as the recession weighs in on revenue and jobs.

Last week, the central bank of Spain said that the country’s economy may shrink nearly 1.5 percent and push the unemployment rate to 23.4 percent if the new Spanish government strictly meets its austerity goals.

Analyst Kathrin Muehlbronner at Moody’s Investors Service said that worsening growth is credit-negative as it further makes it difficult for the government to considerably reduce the fiscal deficit.

Kathrin added that this year, it will be very difficult for Spain to reach the deficit target given the position for revenue growth.

According to the European Commission predictions, this year the economic growth was 0.5 percent for the euro zone countries compared with growth of 1.5 percent in last year. While the IMF forecasts the region to contract 0.5 percent in this year but warned it could drag the world into recession.

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