JAPAN MAY have experienced the worst of the economic crisis, policymakers and economists said yesterday, after official figures showed the country suffered a record fall in economic output in the first quarter of this year.

Yesterday’s data showed that gross domestic product (GDP) tumbled 4 per cent quarter-on-quarter as domestic demand shrank and an export rout continued. The decline in output was equivalent to a 15.2 per cent fall on an annualised basis. Analysts, however, cited the government’s fiscal stimulus plans, falling corporate inventories and an expected stabilising of exports as reasons to hope for a return to growth this quarter.

Ministers called for measures to boost the economy to be implemented as soon as possible.

Japan’s latest 15,400 billion yen (€118 billion) stimulus package is wending its way through parliament. “I think we are now past the worst period but a great deal of effort will still be needed in order to get back on a real upward trend,” said Japanese minister for finance Kaoru Yosano.

Mr Yosano, who is also minister for economic and fiscal policy, signalled that the government would abandon its target of achieving a surplus in the primary budget by 2011. He acknowledged that even the huge planned fiscal stimulus could only partially make up for the contraction in output.

Highlighting the depth of the slump, government statisticians yesterday revised fourth-quarter 2008 GDP figures to show a fall of 3.8 per cent instead of a 3.2 per cent decline.