TOKYO: Japan's economy is expected to shrink 0.4 percent in fiscal 2011, the country's central bank forecast Tuesday, a reversal of its previous projection of 0.3 percent growth.
The Bank of Japan also said it expected growth of 2.0 percent in fiscal 2012, a slight reduction from its previous prediction of 2.2 percent growth.
"Japan's economic activity has been more or less flat, mainly due to the effects of a slowdown in overseas economies and the appreciation of the yen," it said in a statement.
"Although global financial markets remain under heavy strain, financial conditions in Japan have continued to ease," it added.
The BoJ left its key interest rate unchanged at between zero and 0.1 percent, saying its policy board vote on the issue was unanimous.
It projected deflation for fiscal 2011 at -0.1 percent, with inflation of 0.1 percent in fiscal 2012, compared with previous forecasts of zero percent and 0.1 percent respectively.
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