TOKYO, Feb. 16 (UPI) -- Japan's economy shrank in the fourth quarter at the worst annual rate since the first quarter of 1974, government officials said.
The Japanese economy, the second-largest in the world, was particularly hard hit by plummeting exports and a downturn in domestic consumer spending, The New York Times reported Monday.
The real gross domestic product declined at an annual rate of 12.7 percent from October to December, following two straight quarters of contraction. The economy shrank 3.3 percent from the third quarter of 2008.
The 12.7 percent annual decline was the largest since the first quarter of 1974 when an economic slump that featured oil price shocks drove the economy to contract at an annual rate of 13.1 percent.
Japan had appeared to be relatively unharmed by the global downturn, the newspaper said, but has been slammed by declining demand for its exports and a stronger yen.
Overseas markets have cut back on purchases of Japanese automobiles and electronics and Japanese consumers have cut back on spending as companies cut production and lay off large numbers of workers.
"At one time, it looked like Japan escaped the brunt of the financial crisis," Hideo Kumano, chief economist for the Dai-Ichi Life Research Institute, said. "Now we see Japan's most damaged because it's so dependent on trade, which is stalling."
Government officials suggest Tokyo may consider a stimulus proposal. Prime Minister Taro Aso had proposed stimulus spending amounting to 50 trillion yen ($545 billion) last year, but legislative leaders were unable to agree on specifics.