The World Bank announced it has slashed its economic growth forecast for Japan to 0.8 percent this year from an earlier estimate of 1.5 percent, due partly to the negative impact of Tokyo's territorial dispute with Beijing.
"In Japan, the current dispute with China (over the Senkaku Islands) is sapping growth, while the country's huge fiscal debt requires attention," the World Bank said Tuesday in its latest Global Economic Prospects report.
"Assuming that relations with China improve during the course of 2013, output is expected to gradually strengthen, but to expand by only 0.8 percent in 2013, before strengthening toward 1.5 percent by the end of the forecast period," the semiannual report said.
The World Bank projects Japan's economy to grow 1.2 percent in 2014, as measured by inflation-adjusted gross domestic product, down from the previous estimate of 1.5 percent. For 2015, it forecasts a 1.5 percent expansion, the first time the bank has released its growth projections for that year.
The Washington-based institution also trimmed its global growth forecast for 2013 to 2.4 percent from its June estimate of 3.0 percent. The world economy is projected to rise 3.1 percent in 2014, down from an earlier estimate of 3.3 percent, and 3.3 percent in 2015, according to the report.
"The economic recovery remains fragile and uncertain, clouding the prospect for rapid improvement and a return to more robust economic growth," World Bank President Jim Yong Kim said in a statement.
The bank meanwhile revised downward its U.S. economic growth forecast for 2013 to 1.9 percent from an earlier estimate of 2.4 percent, while leaving its growth projection for 2014 unchanged at 2.8 percent.