The Bank of Japan yesterday called the bottom of the slump in the world's second largest economy but highlighted doubts about the robustness of any recovery by predicting the contraction in the fiscal year would be greater than previously forecast.
“Japan's economic conditions have stopped worsening,” the central bank said in a statement following a meeting of its policy board, which last month only felt able to describe them as having “begun to stop worsening”. But the BoJ has yet to embrace the relative good cheer of private sector economists, many of whom have been confident for some weeks that Japan had hit bottom and is on track for a robust rebound that will make up at least some of the ground lost in its harshest postwar recession.
The BoJ, which kept its main policy interest rate at 0.1 per cent, revised downward its forecast for gross domestic product growth in the year to March 2010 from the 3.1 per cent contraction announced in April to an even more depressing 3.4 per cent.