The Brazilian economy contracted by 0.13 percent in the first quarter of the year, according to the central bank's Index of Economic Activity (IBC-Br) released on Wednesday.

The IBC-Br acts as a "preview" of actual GDP figures and is based on estimations by the central bank.

While the drop was of 0.13 percent based on the last quarter of 2017, numbers still showed a 0.86 percent growth year-on-year.

This is still bad news for Brazil which had not seen its economy contract since the last quarter of 2016, when it shrank by 0.78 percent.

In 2017, Brazil saw growth of 1 percent of GDP, ending a severe recession, which saw two consecutive years of negative growth of 3.6 percent.

The figures for 2018 so far show a worse development than predicted.

For the moment, the government is maintaining its estimation of 3 percent GDP growth for 2018, although this could be revised next week when public income and expenditure figures are announced.

Due to worsening indicators, financial analysts in Brazil on Monday lowered their estimations for 2018 from 2.7 to 2.51 percent.

The IBC-BR gathers information about industry, trade, services and agriculture. However, analysts have warned that IBC-Br figures should not be taken as solid fact since they do not always coincide with official economic figures from the Brazilian Institute of Geography and Statistics (IBGE).

The IBGE will publish its official GDP figures from the first quarter on May 30.