New figures show that Japan's economy shrank at its fastest rate since the first oil crisis in 1974 in the final three months of 2008. It was hit by an unprecedented slump in exports.
Japan's heavy dependence on exports and persistently weak domestic spending has led to a sharper contraction than other major economies, despite its escaping much direct fall-out from US credit problems.
Japan's economy shrank 3.3% - or an annual rate of 12.7% - in the fourth quarter of 2008. This was three times the fall in gross domestic product in the same quarter in the US.
The big slide in Japanese GDP in the October-December quarter was its second-worst in modern times, lagging only a 3.4% contraction in 1974, after the first Middle East oil shock.
A plunge in exports was the main culprit behind the massive Japanese contraction. External demand slashed GDP by three percentage points in the quarter.
The subsequent build-up in inventories of unsold cars, flat-screen TVs and many other goods has forced Japanese manufacturers to halt factory lines, pushing industrial production off a cliff.
