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Japan's economy in record plunge Japan's economy in record plunge
(about 6 hours later)
Japan's economy has seen its worst ever quarterly performance, with GDP shrinking 4% in the first three months of 2009. Japan's economy during the first three months of 2009 shrank at its quickest pace since records began, as exports slumped, officials figures have shown.
The contraction is the fourth in succession, following a 3.8% drop in October to December. Output in the world's second largest economy contracted by 4% during the period, or by 15.2% on an annual basis.
But economists are predicting modest growth in the coming months after a small rise in production in March. Japan's economy, which depends heavily on exports, has been hit hard by the global downturn.
The world's second biggest economy, which depends heavily on exports, has been hit hard by the global downturn. But economists predict a modest growth in the coming months, after a small rise in production in March.
The figures from the Cabinet Office show that this is the fourth quarterly fall in gross domestic product (GDP) in a row, after a 3.8% contraction between October and December 2008.
'Weakness spreading'
The BBC's Roland Buerk in Tokyo says people around the world are buying fewer of the cars and electronic gadgets that Japan is renowned for.The BBC's Roland Buerk in Tokyo says people around the world are buying fewer of the cars and electronic gadgets that Japan is renowned for.
In the first quarter of this year, Japanese exports declined by 26%.
"Weakness in the corporate sector is gradually spreading to households," Prime Minister Taro Aso said during a budget hearing to Parliament.
"This is a very serious situation, so we need to respond appropriately."
Investment in factories and equipment dropped by 10.4% in the first quarter, a sign that firms are reducing their outlay. Consumer spending fell by 1.1% during the same period.
"The savings rate has gone up and that has worsened the severity of the recession," said Richard Jerram, head economist at Macquarie Securities in Tokyo.
"It seems the public has basically panicked about job security to an an extent that hasn't happened in previous cycles," he added.
The latest contraction is the biggest since records began in 1955.The latest contraction is the biggest since records began in 1955.
It comes at an annualised rate of 15.2%, compared with a 6.1% fall in the US over the same period.