Japan's government downgraded its view of the economy for the seventh time this year today, citing flagging consumption and imports as a global downturn gathers force and failing to identify a single bright spot.
The gloomy report followed fresh data showing bankruptcies shot to 17-year highs in October, highlighting the unenviable task facing Prime Minister Junichiro Koizumi as he tries to implement vital reforms while keeping the economy afloat.
The Cabinet Office, which last week forecast a 0.9 per cent economic contraction in the year to March, said in the report that the economy was deteriorating, citing growing concerns of a global downturn in the wake of the September 11th attacks.
Even data showing that Japan's current account surplus rose for the first time in 10 months in September did little to lift the gloom as the rebound was mainly on one-off factors rather than an increase in exports.
With the world's second-biggest economy facing its worst recession in at least 20 years, Mr Koizumi said he expected a struggle ahead.