Madrid - The Spanish economy shrank 3 per cent in the first quarter, compared to the corresponding period in 2008, the National Statistics Institute (INE) said Wednesday.

The gross domestic product contracted 1.9 per cent from the fourth quarter. The INE attributed the fall mainly to shrinking consumption and investment.

Prime Minister Jose Luis Rodriguez Zapatero conceded that the figures reflected a serious recession, but said the Spanish economy was evolving better than those of Germany, France, Britain or Italy.

The collapse of Spain's property sector and the international economic crisis have contributed the country's biggest economic slump in 60 years.

The 17-per-cent unemployment is the highest in the European Union, and the Bank of Spain expects the economy to contract by about 3 per cent in 2009.

The government recently announced new stimulus measures including tax breaks for companies maintaining employment.