TOKYO - JAPAN'S economy shrank at the fastest pace on record in the first quarter as demand for its cars, electronics and other goods slumped amid a deepening global recession, data showed Wednesday.

The world's second-largest economy contracted by 4.0 per cent in the three months to March compared with the previous quarter, logging an annualised drop of 15.2 per cent, the Cabinet Office said.

It was the worst performance in the post-World War II era, eclipsing an annualised fall of 13.1 per cent seen in the first quarter of 1974, when the economy was reeling from a global oil shock.

It was also the first time on record that the Japanese economy has contracted for four straight quarters.

Japan entered recession in the second quarter of 2008 as consumers around the world stopped buying big-ticket items during the economic downturn.

Experts say that Asia's biggest economy is probably through the worst of the slump, with exports showing signs of having bottomed out in March.

'The first quarter will definitely be the low point for Japan. The pace of economic contraction should moderate from the second quarter onwards,' said Glenn Maguire, chief Asia economist at Societe Generale.

But prospects for a full-fledged recovery are still dim given weak domestic demand and the fragile state of overseas markets, analysts said.

Japan's economy saw plenty of false dawns during its so-called 'lost decade' of stagnation and deflation in the 1990s, they noted.