The 19-member eurozone's seasonally adjusted gross domestic product (GDP) fell by 0.7 percent in the final three months of 2020, compared with a strong third quarter, according to a preliminary flash estimate released by Eurostat, the statistical office of the European Union (EU) on Tuesday.

The drop was smaller than expected, after a new round of containment measures in the final months of 2020 put a damper on the recovery in the bloc's services sector.

During the fourth quarter, the GDP in the whole 27-member EU was down by 0.5 percent from the previous quarter. The declines were "related to COVID-19 containment measures," said Eurostat.

A flash estimation of the annual growth of 2020 showed the GDP fell by 6.8 percent in the euro area and 6.4 percent in the EU.

European economy suffered the sharpest quarterly slowdown on record in the second quarter last year due to the pandemic, followed by a two-digit strong rebound in the third quarter.

However, economic activities, especially in the service sector, were largely affected after governments reintroduced containment measures towards year-end amid rising new cases of infection.

Among the member states, for which data are available for the fourth quarter 2020, Austria recorded a 4.3-percent fall in GDP from the previous quarter, the highest decrease among all, followed by Italy and France, which saw GDP down by 2.0 percent and 1.3 percent respectively, according to Eurostat.

Germany, Europe's largest economy, saw its GDP grow by 0.1 percent quarter-on-quarter in the last three months of 2020, the country's official data showed on Friday.

Tuesday's preliminary data showed Europe's economy shrank less than analysts have expected. Staff of the European Central Bank (ECB) forecast in December that the euro area GDP would contract by 7.3 percent in 2020 in a baseline scenario, which ECB President Christine Lagarde last month backed as "still broadly valid" despite new worries over lockdowns.

Lagarde told the World Economic Forum last week that 2021 could be a year of recovery, but that would most likely be accompanied by a "very high level of uncertainty". She emphasized that fiscal policy still has to play a dominant role and remain active.

Meanwhile, official data in the United States recorded a 2.3-percent drop in its GDP in 2020. China, with a 2.3 percent increase in GDP year-on-year, is expected to be the only major economy to post growth in the pandemic-ravaged year.

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