Japan's economy, the second largest economy in the world, shrank at its fastest rate in 35 years in the fourth quarter of 2008, according to figures out on February 16.
Official Japanese data has revealed that the country's gross domestic product contracted 3.3 percent in the last quarter of 2008 from the previous quarter. Overall in 2008 the country recorded a 12.7 percent decline year on year in economic activity, compared to a 3.8 percent decline in the US and a 1.2 percent decline in the euro zone.
Japan's economy, which relies heavily on exports, has suffered a sharp fall in foreign demand for its products, in particular, for cars and electronic goods. Top Japanese firms like Toyota, Nissan, Pioneer and Sony have already announced deep job cuts and projected net losses for the full year through to March.
In its latest forecast, the International Monetary Fund predicts that Japan's economy will shrink 2.6 percent in 2009, outpacing the two percent overall decline it expects for advanced economies.
To revive the economy, Japan's government passed a contentious JPY 4.8 trillion ($52.2 billion) extra budget in January. Japan is also considering additional measures to shore up the economy with fresh spending likely to top JPY 10 trillion ($109 billion).