InsideJapan News Network

The Bank of Japan has predicted that the Japanese economy has already reached its lowest point and may be set to experience a mild recovery.

Both the Bank of Japan and the Japanese government have upgraded their economic forecast for the first time since 2006, with bank governor Masaaki Shirakawa forecasting a potential return to positive growth within this economic quarter.

The first quarter of 2009 saw the Japanese economy contract by four per cent, the largest drop on record, but there is growing confidence that the worst of the recession has passed.

Japan's Cabinet Office's monthly report said: "While the economy is in a difficult situation, the tempo of worsening has become moderate."

However, with unemployment levels continuing to rise rapidly, the government has been keen to stress that the situation currently remains "severe".

Nevertheless, the current optimism is in contrast to the negative forecasts seen earlier this month, with a spokesman for securities brokerage Daiwa predicting in the Independent that the country "looks set for a return to persistent deflation".

Written by Mark Smith


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