A plunge in demand for Japanese exports has the world's second largest economy sinking at a record pace, with the prime minister warning the situation could become even "more severe."

Japan said Wednesday its economy shrank at a 15 percent annual pace during the first three months of 2009.

It is the worst decline since Japan began keeping records in 1955 and much bigger than the declines seen so far in the United States or Europe.

Officials say a big reason for the fall is a drastic drop in demand for Japanese products around the world.  Overseas shipments for the first three months of 2009 fell 26 percent from the previous quarter.

Japanese Prime Minister Taro Aso says the economic struggles could get worse, because Japanese consumers are only now starting to feel the impact of the recession.

Japanese consumer spending fell more than one percent during the first three months of the year compared to the last three months of 2008.

Still, some economists say the new data might indicate that Japan has already seen the worst of the recession.

They say the global drop in demand for exports is slowing and that moves by Japanese companies to survive the downturn should also help.

Japan is not the only Asian country to suffer because of falling demand for goods around the world.

Thailand said Tuesday that exports declined for a sixth consecutive month in April, dropping more than 26 percent compared to the year before.

Meanwhile, an official with the World Bank warns it is too soon to tell if China is starting to recover from the global recession.

World Bank China director David Dollar says government spending has helped the world's third largest economy but that more private investment is needed to sustain economic growth.

China said Wednesday it will send three delegations to Taiwan to buy food and machinery, part of what Chinese officials say is a joint effort to tackle the financial crisis.

Also Wednesday, the Asian Development Bank signed agreements with eight Vietnamese banks in an effort to help that country's exporters.

Some information for this report was provided by AFP, AP and Reuters.