Japan’s economy sank into a recession last quarter that’s likely to deepen further as households limit spending to essentials and companies cut hiring, investment and production to stay afloat amid the coronavirus pandemic.

Gross domestic product shrank an annualized 3.4 percent in the January-March quarter compared with the previous quarter as exports slid and social distancing crimped consumer spending, Cabinet Office figures showed Monday.

While the result was slightly better than an expected 4.5 percent drop, helped by a downgrade of the previous quarter’s contraction, economists and policymakers agree that worse is in store in the current quarter.