"Exports and production are falling drastically, while employment conditions are rapidly worsening. Financing for businesses is also severe, and it is correct to say that Japan is in the middle of a financial crisis," Finance Minister Kaoru Yosano told the parliament.
His remarks came after the Cabinet Office downgraded its forecast for Japan's GDP to a contraction of 3.3 per cent for the current fiscal year through March 2010. It had previously predicted GDP would be flat for the period.
"In addition to sharp declines in exports and production, private consumption has been weakening," the office said in its latest economic estimation. The fiscal 2009 economy "will have to get started at a low in negative territory which has never been seen before."
Yosano also appealed to lawmakers to quickly pass the extra budget, which calls for a record $155 billion in government spending to finance a new stimulus package.
For fiscal 2008 that ended March 31, the economy is likely to have shrunk 3.1 per cent, a bigger contraction than the fall of 0.8 per cent projected in December by the cabinet office.