TOKYO, Japan - February 16, 2009 - Japan warned Monday it was in the deepest economic crisis since World War II, after Asia's biggest economy suffered its worst contraction in almost 35 years.

The economy shrank for a third straight quarter in the three months to December as the global slowdown crushed demand for Japanese exports, a key pillar of the world's number two economy.

The government said the slump was even worse than the recession of the 1990s when the country's economic bubble burst, ushering in a decade of economic stagnation and deflation.

Japan's economy contracted 3.3 percent in the fourth quarter of 2008 - 12.7 percent on an annualised basis, official data showed.

It was the weakest performance since 1974 when the country was reeling from the first oil crisis, and the government said this slump would be even more severe.

"This is the worst ever crisis in the post-war era. There is no doubt about it," Economic and Fiscal Policy Minister Kaoru Yosano said, warning that a rebound is impossible before the global economy improves.