The Bank of Japan sharply reduced its forecasts for the economy for this fiscal year and next, while government figures showed that Japanese exports plunged a record 35 per cent in December. Adding to the gloom in the region, South Korea unveiled its first year-on-year decline in quarterly economic growth since the Asian financial crisis more than a decade ago, while unemployment in Taiwan rose to a five-year high.

China said its economy expanded by 6.8 per cent in the fourth quarter compared to the same period the year before, confirming the rapid cooling which has seen the rate of growth fall by nearly half over the past 12 months. For the year as a whole, the economy grew 9 per cent, down from the revised 13 per cent growth rate in 2007.

The Chinese government does not publish sequential growth figures from one quarter to the next, however after stripping out seasonal factors, several economists calculated that the economy barely grew at all from the third to fourth quarters.