Japan, the second biggest economy in the world, has officially entered recession, and the announcement prompted another fall on the Nikkei floor.

The country’s Gross Domestic Product figure was down almost half a per cent in the third quarter, and now Japan is back where it was in 2001, in negative territory.

Japanese exports have been hit hard by the global financial crisis. Car giant Toyota sells three quarters of its vehicles abroad. But the yen has spiked to a 13-year high against the dollar.

It was obvious the Japanese economy was weakening, but the pace of the decline has caught the country by surprise.

The Bank of Japan has lowered its interest rate in line with other institutions worldwide. It is now down to 0.3 per cent from 0.5 per cent. Some analysts are speculating that the Central bank could cut rates to zero.

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