Despite unveiling a record $1 trillion stimulus package, Japan’s economy shrank 3.4% in the first three months (January to arch) of 2020 compared to a year ago, representing its biggest slump since 2015, BBC reported.

Japan is the world's third-largest economy after US and China.

Analysts expect Japan’s economy to further shrink 22% during April to June quarter, which would be its biggest decline on record.

The Japanese government has already announced a record $1 trillion stimulus package, and the Bank of Japan rolled out massive liquidity enhancing measures in April.

Unlike other nations, Japan did not opt for a stringent national lockdown. However it declared a state of emergency in April which severely disrupting supply chains and businesses in the trade-reliant nation.

Private consumption fell 0.7% in the first quarter as people refrained from leisure and dining out to avoid infection. Capital expenditures by companies dropped 0.5%.

Japan was already reeling under the impact of drastic drop in consumer spending dropped after Shinzo Abe-led government last October increased a tax on consumption to 10 percent from 8 percent in a move to help pay down the national debt and and fund social services as the country’s aging population. Japan’s national debit is already the the highest among developed nations. The country’s GDP suffered a 6.4% decline during the last quarter of 2019

The outbreak of coronavirus pandemic has resulted in plunging of Japan’s exports. The country was also forced it to postpone the Olympics.