Japan's GDP shrinks a record four per cent in first quarter as exports plunge

JAPAN&rsquo;S economy shrank a record four per cent in the first quarter as domestic demand and investment buckled, threatening to crush an anticipated export-led rebound in the second half.<br /><br />Any recovery depends on whether Japanese exporters, who have begun replenishing depleted inventory, see demand picking up in Western markets, and whether Tokyo&rsquo;s $160bn (&pound;102bn) stimulus plan can pull consumption at home back from the brink.<br /><br />The Bank of Japan appeared pessimistic on both counts. Governor Masaaki Shirakawa said the rebound in output around the world was due solely to restocking and that consumption and investment would remain weak.<br /><br />Even though exports plunged a record 26 per cent in January-March and companies slashed inventory, there were signs at the end of the quarter that world trade may have begun to pull out of a dive triggered by the global financial crisis.<br /><br />By contrast the outlook for Japan, where GDP is shrinking twice as fast as in the US, has darkened.