Italy's economy shrank by 0.2% in the three months to the end of September.
Figures issued by Istat, the official statistical agency, show the first contraction in the Italian economy since 2009.
The government has predicted the economy will contract by 0.4% in 2012.
However, the BBC reports Confindustria, an employers' lobby group, expects GDP to fall by 1.6% in 2012.
A package of emergency austerity measures was passed by Parliament earlier this month.
