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UPDATE 1-Brazil's GDP shrinks in 1st qtr, first contraction since 2016

Jamie McGeever

(Adds details of data, context)

BRASILIA, May 30 (Reuters) - Brazil's economy shrank in the first quarter for the first time since 2016, data showed on Thursday, underscoring a deepening malaise in Latin America's largest economy and pushing it closer to a double-dip recession.

Brazil's gross domestic product (GDP) shrank 0.2% from the prior quarter, statistics agency IBGE said, in line with the median estimate in a Reuters poll. The economy grew 0.5% from a year earlier, in line with economists' forecasts.

The contraction piled pressure on President Jair Bolsonaro, who was swept into office in January in part on his market-friendly pledges to boost growth and lift the gloom hanging over the economy since a brutal 2015-16 recession.

A sharp drop in fixed investment, along with declining industrial and agricultural output, was behind the economy's weak performance in the first three months of this year, IBGE said.

The central bank's weekly survey of around 100 financial institutions showed the average estimate for 2019 GDP growth has tumbled to just 1.2% from 2.5% at the start of the year. (Reporting by Jamie McGeever Editing by Brad Haynes, Chizu Nomiyama and Jeffrey Benkoe)