The economy will contract by 0.6 percent in fiscal 1999 and 0.8 percent in fiscal 2000 in real terms, marking negative GDP growth for four consecutive years, the Industrial Bank of Japan predicted Thursday.

While recent statistics indicate a halt in the deterioration of the economy, conditions will worsen in the latter half of the current fiscal year, when the effects of the economic pump-priming measures wear off, according to economists at the nation's sole fully functioning long-term credit bank.

Structural changes in businesses will come into full swing in fiscal 1999 and 2000, after which economic recovery will probably begin, according to the IBJ report.