At a quarterly level, gross domestic product was up by 0.5%, shows data released by the Statistics Office on Tuesday.

Investment activity shrank at an annual level, with gross capital formation declining by 1.5% to reflect a drop in EU-backed project following the conclusion of the previous EU financing period.

This led to a drop in investment in buildings, which was down 27.2% on last year. Investment in machinery and equipment was up 9.3%.

Exports continued to be the engine of the economy in the first quarter, growing by 5.3% year-on-year. The trade balance contributed 1.9 percentage points to annual growth.

Imports grew at the slowest pace in several quarters at 3.2%, as household consumption slowed to 0.6% after peaking in the past two quarters.

Domestic consumption was up 1.2% on the first quarter of 2015, with public and government consumption continuing to see steady growth of 3% and 2.7%, respectively.

The drop in investment in buildings caused a 18.3% drop in value added in the construction sector, the biggest decline in the sector since 2013, following a recent spike in construction works fuelled by the conclusion of projects from the 2007-2013 EU financing period.

The financial sector also saw its biggest decline in five quarters, as output contracted by 6%.

Manufacturing output expanded at an annual rate of 6.8% with the help of ongoing growth in exports. The wholesale and retail sector grew by 5.1% and agriculture output was up by 8.9%.

The revival of the real estate market saw an increase in value added of 6.5% in the sector.