Japanese govt predicts hard times

The Japanese government said today the economy is likely to shrink 3.3% this fiscal year, its worst contraction since World War II, as exports continue to plummet.

“The global economic crisis and economic downturn is increasing in severity, and Japan’s export market is rapidly shrinking,” the Cabinet Office said in a statement.

Japan’s cabinet had previously predicted the country’s gross domestic product would be flat in the current fiscal year through March 2010.

It also said GDP, a measure of the total value of a nation’s goods and services, is likely to have shrunk 3.1% in the fiscal year that ended last month, worse than the previous estimate of a 0.8% contraction.

With the latest estimates, Tokyo now expects the two-year period to be the worst for the economy in the country’s postwar history. The largest previous GDP contraction was 1.5% in 1998.

But the cabinet said its economic measures will prevent Japan from entering a downward spiral.