Earlier in the latest blow to hit the Japanese economy the government announced that collapsing exports had taken Japan's current account balance into deficit for the first time in 13 years.

January's deficit stood at a record 172.8 billion yen ($1.8bn), far bigger than the previous deficit record of 25.6 billion yen in January 1996.

Japan's current account is the broadest measure of its trade with the rest of the world, in terms of goods, services, tourism and investment.

Global demand for Japanese cars and
other exports has dried up [EPA]
It is calculated by determining the difference between Japan's income from foreign sources against payments on foreign obligations and excludes net capital investment.

Japan's export-dependent economy has historically run a massive current account surplus but demand for the cars, high-tech goods and machinery in which the country traditionally excels has dried up as consumers rein-in spending.

Government officials are now warning the country faces its worst recession since World War II.

According to the latest government data Japan's exports in January dropped a record 46.3 per cent from a year earlier to 3.28 trillion yen, marking the fourth consecutive month of year-on-year declines.

Japan's exports to the US fell 52.9 per cent, while shipments to Asia dropped 46.7 per cent from a year earlier.

Exports to the European Union fell 47.4 per cent, while worldwide car exports – traditionally a mainstay of the Japanese economy – fell a massive 66.1 per cent.

The sharp drop in exports has triggered production and job cuts among manufacturing giants such as Toyota and Sony, and put the economy on course for its longest recession in the post-war era.