Japan's GDP shrinks at record pace

Japan's economy shrank at record pace during the first three months of the year, official figures show.

The country's gross domestic product (GDP) shrank by 3.8 per cent, equivalent to 14.2 per cent over a year.

However, analysts had earlier predicted a decline of four per cent.

Tokyo has been hit particularly hard by the global recession due to its reliance on car exports and electronics.

The annual drop of 14.2 per cent represents the worst decline since 1955, but the fact the figure was slightly better than expected has raised hopes the worse may now be over for the world's second-largest economy.

In April, consumer confidence hit a ten-month high with sales of electronics rising by a fifth since the government launched an initiative aimed at encouraging shoppers to invest in greener items.

The car manufacturer Honda has also benefited from government tax breaks for fuel-efficient cars, with sales rising during the last two months.