Image caption Japan is struggling to restore damaged production lines 
 
 Japan's economy, the world's third largest, has slid back into recession after the devastation caused by the earthquake and tsunami in March. 
 
 Gross domestic product shrank 0.9% in the first three months of the year, the Cabinet office said, giving an annualised rate of contraction of 3.7%. 
 
 Analysts say consumption and exports were worst hit. 
 
 Japan's economy has now contracted for two quarters in a row, the generally accepted definition of a recession. 
 
 Japan sank into a recession during the global financial crisis, but had emerged from it in 2009. 
 
 The contraction in the first three months of this year was bigger than expected, with most analysts expecting the annualised rate would show a contraction of about 2%. 
 
 "Japan's economy is expected to remain weak for the time being," said Japanese Economics Minister Kaoru Yosano on Thursday. 
 
 However, Mr Yosano said that supply constraints were easing and reconstruction demand was likely to spur growth. 
 
 "The economy has the strength to bounce back," Mr Yosano said. 
 
 Pessimistic consumers 
 
 Naomi Fink, Japan Strategist at Jefferies, said the most worrying part of the latest data was the decline in private consumption of 0.6%, as people cut their spending after the earthquake. 
 
 Private consumption accounts for almost 60% of the Japanese economy. 
 
 "It was already soft in the final quarter of 2010," said Ms Fink. 
 
 The earthquake, however, has further dampened sentiment. 
 
 The consumer confidence index fell to 33.1 in April, according to the Cabinet Office, where a reading below 50 suggests consumer pessimism. 
 
 "Judging by the drop in retail sales and household expenditures over March, consumption should be one of the greater contributors to negative growth in the first quarter," said Ms Fink. 
 
 Damaged supply chains 
 
 The second biggest component of the world's third largest economy is trade. 
 
 Exports made up 13.5% and imports 12.7% of gross domestic product in 2009. 
 
 The massive earthquake and tsunami devastated exports, while the costs of imports rose due to high commodity prices. 
 
 Japan economy Consumption: 59.2% 
 
 Exports: 13.5% 
 
 Imports: 12.7% Source: Japan Cabinet Office (2009) 
 
 Japan's trade surplus fell by 34.3% in March compared with the same month a year ago. 
 
 "One issue on the export side is the ongoing struggle to restore damaged production lines and supply chains," said Ms Fink. 
 
 "On the import side, the increase in demand for fossil fuels, to offset the drop in supply of nuclear energy, is unlikely to fade anytime soon," she added. 
 
 Reconstruction demand 
 
 Once rebuilding gathers momentum, however, it should have a positive impact on the economy. 
 
 But that is only likely to happen towards the end of this year. 
 
 "I do not expect positive growth in the second quarter," said Ms Fink. 
 
 The country's central bank begins its two-day meeting on Thursday to discuss its monetary policy. 
 
 "Japan's economic strength is gradually declining," Bank of Japan (BOJ) governor Masaaki Shirakawa told a parliamentary committee meeting on Tuesday. 
 
 Analysts say this signals that the central bank will stick to its ultra-loose monetary policy. 
 
 The bank has pumped billions of dollar into the financial system to stabilise the economy since the massive earthquake. 
 
 The BOJ is expected to keep the rates unchanged at the lowest level in a range of 0.0% to 0.1%, to help stimulate the economy. ||||| TOKYO — Japan ’s economy shrank at an annual rate of 3.7 percent in the first quarter, tipping the country into a recession, as the March 11 earthquake and tsunami disrupted production and prompted consumers to cut back on spending. 
 
 The drop-off, reported Thursday, was worse than economists had expected. Among 23 economists surveyed by Bloomberg, the average projection was for a drop of 1.9 percent. 
 
 The figures also indicated Japan’s second consecutive quarter of economic contraction, leading the country, by most assessments, into its second recession in less than three years. 
 
 Economists project that the Japanese economy will shrink again in the current quarter, which ends in June, as production continues to falter and weigh on industrial output and exports. 
 
 Still, some data suggest that the recession may be deep but quick. 
 
 Machinery orders, an indicator of future capital spending, increased unexpectedly in March, while manufacturers said recently that they hoped to return to normal production more quickly than initially forecast. 
 
 “Japan’s economy is expected to remain weak for the time being,” Kaoru Yosano, Japan’s economics minister, told reporters after the figures were announced Thursday morning. Supply constraints were easing, and reconstruction demand would most likely be felt later this year, Mr. Yosano said. 
 
 “The economy has the strength to bounce back,” he said. 
 
 Masamichi Adachi, an economist at JPMorgan Chase in Tokyo, said in a research note that the “immediate impact from the disaster on March 11 was larger than we had expected.” 
 
 But he echoed Mr. Yosano’s sentiment, adding that “monthly data and anecdotal information suggest that economic activity has bottomed in March and an improvement likely will continue.” 
 
 On the other hand, Frederic Neumann, a regional economist at HSBC in Hong Kong, said the data also showed just how weak the Japanese economy had been even before the March disasters. 
 
 “The event affected only the last three weeks of the quarter and thus doesn’t fully account for the surprising weakness for the whole period,” he wrote in a research note. “Moreover, the substantial downside revisions to fourth-quarter G.D.P. also suggest that underlying momentum wasn’t as robust as widely thought.” 
 
 The data, released by the Cabinet Office in Japan, showed that the country’s gross domestic product had shrunk 0.9 percent in the first quarter, compared with the previous three months. That translates to a decline, in annualized terms, of 3.7 percent. 
 
 The nuclear crisis at the Fukushima Daiichi plant has compounded the effects of the earthquake and tsunami by reducing power capacity. 
 
 The government has ordered factories, offices and homes across Japan to reduce their electricity use 15 percent this summer. 
 
 Earlier this month, the government told another nuclear power plant to shut down until it could bolster its tsunami defenses, adding to concerns about a possible energy shortage. A number of other nuclear reactors that suspended operations after the quake remain closed as the government overhauls its policy on nuclear power, which supplies 30 percent of Japan’s electricity. 
 
 More than 24,000 people are dead or missing as a result of the March 11 quake and tsunami, which destroyed swaths of Japan’s northeast coast. The government has estimated that damage from the disaster could be as much as ¥25 trillion, or more than $300 billion. 
 
 The disaster hit an economy already weakened by years of deflation and depressed consumer spending, which made it reliant on exports for growth. The Japanese economy shrank for four consecutive quarters during the global financial crisis. 
 
 Japan has long been the laggard in the Asian region, where most countries rebounded quickly after the crisis. Regional heavyweights like China and India are growing quickly, and on Thursday, Singapore said its economy had expanded 8.3 percent in the first quarter, compared with the same period the previous year, and a seasonally adjusted, annualized 22.5 percent from the previous quarter, thanks to strong manufacturing. 
 
 In contrast, Japanese exporters have had to cut back production since the disaster as they have repaired their supply chains and grappled with the energy shortage. Last week, Toyota Motor, whose operations have been severely disrupted since the quake, said its first- quarter profit had fallen 77 percent from the same period last year. 
 
 The Nikkei 225-stock average in Tokyo has lost more than 7 percent since March 11. Retail sales recorded their biggest drop in more than a decade in March as uncertainties after the disaster caused consumers to avoid nonessential spending. 
 
 The Japanese economy contracted in the fourth quarter of 2010 as well. 
 
 Though economists often define a recession as two consecutive quarters of decline in G.D.P., Japan appoints a committee of academics to determine when recessions begin and end. 
 
 The Japanese Parliament has approved a ¥4 trillion supplemental budget for reconstruction, and Prime Minister Naoto Kan has promised more spending to help cushion the economic blow. 
 
 The Japanese central bank has also injected record amounts of cash into money markets in a bid to encourage spending in the economy. 
 
 The bank may need to take further action in coming months, Mr. Neumann of HSBC said. 
 
 “The real message from today’s G.D.P. release is that even before the earthquake struck, the economy was flying in lower orbit than previously thought. Deflationary pressures, therefore, will prove more persistent than initially assumed,” Mr. Neumann wrote. “More monetary policy action, therefore, appears likely.”
– More misery for Japan: The triple disasters that struck the country in March sent the country's economy sliding into its second recession in three years, according to the latest government figures. The earthquake, tsunami, and nuclear crisis disrupted production and caused a collapse in consumer spending, reports the BBC. Japan's economy shrunk at an annual rate of 3.7% in the first quarter of this year, a drop almost double what economists had predicted. Analysts say reconstruction demand is likely to spur growth later in the year, but things are expected to get worse before they get better, the New York Times notes. Companies struggling with energy shortages are having a hard time restoring damaged production and supply lines. Japan estimates that the total cost of the disasters will top $300 billion.