Demand for goods and services declined last quarter at its fastest rate on record, the Cabinet Office said Monday.
The output gap, a measure of the balance between demand and supply in the economy, fell 8.5 percent in the three months ended March 31, more than the 4.5 percent drop in the fourth quarter, according to the Cabinet Office. It was the biggest decline since the government started tracking the gauge in 1980.
Gross domestic product shrank an annualized 15.2 percent in the first quarter as exports collapsed and consumers and businesses pared spending. A widening output gap signals Japan may be heading back to deflation, which plagued the economy for almost a decade until 2005.