TOKYO (Kyodo) -- The Japanese economy is projected to shrink 4.1 percent in fiscal 2009 following a 2.9 percent contraction estimated for fiscal 2008 ending next month, according to an average of forecasts released by eight major private-sector economic research institutes by Thursday.
The projected contractions, as measured by real gross domestic product, for fiscal 2008 and 2009 would be steeper than the sharpest ever shrinkage of 1.5 percent logged in fiscal 1998.
The Norinchukin Research Institute said both domestic and external demand would remain in the doldrums and the Japanese economy will continue worsening until the world economy could begin to improve in the middle of fiscal 2010.
Most think tanks believe that exports will drop sharply amid the global economic downturn and the economy will be increasingly caught in a vicious circle in which consumer spending falls due to corporate cutbacks in production, workforces and wages.
All forecasts by the eight think tanks are far below the government's projection of a 0.8 percent contraction for fiscal 2008 and zero growth for fiscal 2009.
They forecast the Japanese economy will post an average 0.7 percent gain in fiscal 2010 for the first turnaround in three years.
The eight think tanks also include the NLI Research Institute, the Mizuho Research Institute, the Dai-ichi Life Research Institute, Meiji Yasuda Life Insurance Co., the Financial & Economic Research Center of Nomura Securities Co., the Mitsubishi Research Institute and the Daiwa Institute of Research.