The Philippine economy shrank a seasonally adjusted 2.3 percent in the first quarter from the last three months of 2008, much worse than market expectations, the government said on Thursday.

It was the weakest performance by the economy in any quarter in the past two decades, officials said.

The latest data follows growth of a revised 0.3 percent in the fourth quarter of 2008 from the previous three-month period.

Economists had expected a seasonally adjusted drop of 1.8 percent quarter-on-quarter, the first contraction in eight years, with consumers spending less as the global downturn hurt the country's exports and slowed remittance inflows.

The economy grew 0.4 percent in the first quarter from a year earlier, the government said, significantly lower than a median forecast of 2.5 percent in a Reuters poll earlier this week.

The government had said it expected growth of 1.8-2.8 percent annual growth in the first quarter, driven mainly by modest expansion in the services sector.

Manila expects the global recession to dampen economic growth to 3.1-4.1 percent this year against a 4.6 percent expansion in 2008.