Brazil's economy shrank 0.3 percent in the first quarter, government statistics agency IBGE said on Wednesday, less than the 0.8 percent drop expected by economists in a Reuters poll.

Brazil's gross domestic product fell 5.4 percent from a year earlier, according to IBGE.

The Brazilian economy was expected to shrink for the fifth straight quarter in what is the country’s worst recession since the 1930s. A dire political crisis has hindered investments, while high unemployment is weighing on consumer spending in Latin America’s largest economy.

Brazil is preparing to host the 2016 Summer Olympics facing a series of unprecedented challenges, including an outbreak of the Zika virus, an economic downturn, and a political crisis that has implicated some of the country's top leaders, including President Dilma Rousseff.

Data from Reuters were used to report this story.