Rome  - Italy's economy contracted in the first quarter of 2009 by 2.4 per cent, the country's central statistics office ISTAT said Friday.

The quarter was the fourth in a row in which Italy's GDP fell, and the sharpest drop since records began in 1980. In comparison to the first quarter in 2008, Italian GDP shrank by 5.9 per cent.

Italy's economy, the euro-zone's third largest, is being hurt by falling demand for Italian exports as the country's biggest trading partners suffer from global recession.

The European Commission and the Italian government expect Italy's economy to shrink more than 4 per cent in 2009, marking the biggest annual drop since World War II.

Prime Minister Silvio Berlusconi's government has tried to revive consumer spending with 2 billion euros (2.7 billion dollars) of incentives for the purchase of cars and home appliances.(dpa)