Portugal's Gross Domestic Product ( GDP) shrank by 3.9 percent in the first quarter of this year as the heavily indebted country sunk further into recession, the national statistics institute INE said on Wednesday.

Portugal's economy had recorded a negative growth of 3.8 percent in the previous quarter.

The further contraction of the economy was due to the continuous decline in domestic demand, particularly in the investment in the field of construction, the INE said.

However, Portugal's export has seen a slight increase due to the rising demand of foreign markets, it said.

Under a 78-billion-euro (about 100.52-billion-U.S.-dollar) bailout agreement with the troika comprising the European Union, the International Monetary Fund and the European Central Bank in May 2011, Portugal has been implementing a harsh austerity policy which has been blamed for its deepening recession.