The export-led expansion that began in 2002 ran out of steam in late 2007 in the context of slowing world trade. Output began to contract from the second quarter of 2008, even before the global financial crisis intensified in September. Although Japan was not at the epicentre of the crisis, its export-dependent economy was vulnerable to the collapse in world trade, which resulted in its most severe recession of the post-war era. Exports and industrial production each fell by around a third in volume terms between September 2008 and February 2009, leading to a rise in unemployment to unprecedented levels by mid-2009 and to a decline in wages. Financial market conditions deteriorated as credit conditions tightened and the capitalisation of the Tokyo Stock Exchange fell by half. By March 2009, the confidence of large manufacturing firms had plummeted to its lowest level since 1975, causing a major retrenchment in their investment plans. Headline inflation has turned negative and by mid-2009 prices were down around 2% year-on-year. Output is projected to drop by around 6% in 2009, following a 0.7% decline in 2008.