Japan economy likely to remain stagnant for sometime

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TOKYO, Oct 20 (AFP): Japan's economy is expected to remain stagnant for sometime with a global slowdown weighing on exports, the country's central bank chief said today.
Corporate earnings in Asia's largest economy are shrinking and companies are cutting their capital investment, Bank of Japan (BoJ) governor Masaaki Shirakawa told a meeting of the central bank's branch managers.
"The economy of our nation is currently stagnant due in part to slower exports stemming from the lingering effects of high energy and material prices and a slowdown in overseas economies," he said.
Business confidence remains cautious while consumption has turned softer due to inflation and sluggish wages, Shirakawa said.
"Looking ahead, it is highly probable that the economy will remain stagnant as it has become clear that overseas economies continue to slow down," he said.
Japan's economy suffered its worst contraction in seven years in the second quarter of 2008 and many analysts believe it is already in recession.
The BoJ also downgraded its assessment of the country's nine regions in a quarterly report.
"Economic growth had been sluggish in general, mainly due to the effects of earlier increases in energy and materials prices and weaker growth in exports," the report said.