Japan's economy shrinks at fastest pace since 1974

Agence France-Presse

Posted at Feb 16 2009 08:43 AM | Updated as of Feb 16 2009 05:20 PM

TOKYO - Japan's economy shrank at an annualised pace of 12.7 percent in the fourth quarter of 2008 -- its worst performance since 1974 -- as the recession deepened, official figures showed Monday.

Asia's largest economy contracted by 3.3 percent in the three months to December from the previous quarter as exports and factory output slumped due to the global economic crisis, the government said.

It was a third straight quarter of negative economic growth for Japan, which is in the midst of its first recession in seven years.

Exports plunged 13.9 percent from the previous quarter as demand for Japanese cars, electronics and other goods slumped in recession-hit overseas economies.

Business investment in factories and equipment dropped 5.3 percent as companies scrambled to reduce their costs to cope with the recession.

Household spending slipped 0.4 percent as consumers tightened their belts following a wave of job cuts by Japanese companies.

The figures were even worse than the average analyst forecast for an annualised contraction of 11.6 percent.

The pace of the contraction also picked up sharply compared with the three months to September, when the economy shrank 0.6 percent from the previous quarter.