The Japanese economy shrank at an annual pace of 6.3% last quarter as growth was battered by typhoons and crimped consumer spending.
The seasonally adjusted economic data released Monday by the Cabinet Office comes amid looming fears about the economic damage expected from the new viral illness COVID-19 that began in China late last year.
Japan's gross domestic product, or GDP, the sum of the value of a nation's products and services, slipped 1.6% in the last three months of 2019 quarter-on-quarter.
The annualized rate shows what the drop would have been if that same pace had continued for a year.
The contraction for the October-December period was the first Japan had in more than a year. The amount of decline was the worst in about five years.
The news sent the Nikkei 225 benchmark stock index falling in trading Monday.
Domestic demand fell in the quarter at an annual pace of 8.0%.
Hurting people's spending was the rise in the consumption tax from 8% to 10% in October.
Both exports and imports fell during the quarter.
The new viral illness is likely to affect various aspects of the economy.
Japan had been counting on Chinese tourists in recent years to sustain growth, but visits have dwindled to a trickle.
Japanese companies have halted or adjusted production, because of supply chain disruptions or work suspensions at their own factories in China.
Overall consumption is likely to drop as people avoid crowds.
“The concerns for the export focused economy is continued pressure amid the coronavirus," said Jingyi Pan, market strategist at IG in Singapore of Japan's GDP.
Yuri Kageyama is on Twitter https://twitter.com/yurikageyama
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