MADRID — Spain's National Statistics Office says the country's recession is worse than previously thought with the economy shrinking by 0.8 percent in the fourth quarter of 2012 compared with the previous three-month period. The figure released Thursday was higher than last month's preliminary estimate of a 0.7 percent contraction and is more than double the third quarter's 0.3 percent drop. Spain's economy has been shrinking for the last 18 months with unemployment stands at 26 percent. The statistics department also says economic activity was down 1.9 percent in the fourth quarter from the year-earlier period. For the whole of 2012, it shrank 1.4 percent. The government predicts the economy will start to stabilize in the second half of this year and emerge from recession in 2014. Spain's economy sank deeper into recession in the fourth quarter of last year as high unemployment and biting austerity measures prompted households to slash spending, the official data showed. The eurozone's fourth largest economy shrank by 1.4 percent on an annual basis in 2012, a slightly better performance than the decline of 1.5 percent forecast by the government. The economy shrank 0.8 percent in the final quarter of 2012 from the previous three months, after dropping 0.3 percent in the third quarter, the national statistics institute said. The figures were slightly bleaker than preliminary data released last month by the statistics institute which saw the economy contracting by 0.7 percent in the final quarter on a quarterly basis and by 1.37 percent for the entire year. Spain is grappling with a double-dip recession and 26 percent unemployment, having never recovered from a real estate crash in 2008. Prime Minister Mariano Rajoy's conservative government forecasts the economy will return to growth in the second half of 2013. It forecasts an economic contraction of 0.5 percent in 2013 followed by an expansion of 1.2 percent in 2014, a significantly more optimistic forecast than that of most analysts and international organisations. Activity is being cramped by his government's program of spending cuts and tax rises, aimed at saving 150 billion euros ($194 billion) between 2012 and 2014, which have prompted mass street protests. — Agencies