The Bank of Japan has issued a downbeat report on the country’s economy and reduced forecasts for growth.
In January, policy board members forecast a contraction of 2% in the economy but this has since been revised to 3.2%.
The report says: “Economic conditions in Japan have deteriorated significantly… In the corporate sector, exports have decreased significantly due to a sharp downturn in overseas economies, and business fixed investment has also declined substantially, reflecting the deterioration in corporate profits and financial conditions. In the household sector, private consumption has weakened against the backdrop of the deterioration in consumer sentiment and in the employment and income situation.”
However, forecasts for 2010 show the economy growing by 1.5%.
Policy board members say the economy is “greatly” dependent on the developments in the rest of the world and the global financial markets. Therefore it is likely that domestic demand will continue to weaken in the first half of 2009, but the pace of decline in exports and production will decelerate so the deterioration in Japanese growth will begin to flatten out.
Japanese exports down 45.6%