The government will downgrade its assessment of the economy for the fifth straight month in its report for June, Heizo Takenaka, minister in charge of economic and fiscal policy, indicated Friday.
"The economy is facing a bit of a tough situation, and we will have to change our view from the previous month," Takenaka told a news conference.
Asked whether Japan's economy is on the verge of recession, Takenaka acknowledged that may be the case.
"It's a separate and delicate issue how to interpret recession, but there has been progress in negative developments, so it is better to understand it in line with them," Takenaka said.
In its May report, the Cabinet Office described the economy as "further weakening."
This is likely to be changed to "deteriorating" in the June report, due out Thursday, government sources said.
The downgrade reflects data on personal spending, which has been described as "nearly flat," and signs of slowing growth in spending on corporate plant and equipment.
Eiji Kawade, vice minister for economic and fiscal policy, said at a separate news conference that the coming report will downgrade the government's assessment of corporate capital spending, described as "increasing" in the previous reports.
This downward revision is due to the Cabinet Office's estimate that corporate capital investment contracted 2.4 percent in the January-March period from the previous quarter, Kawade said.
In other remarks, Takenaka was unclear on whether the government's growth target of 1.2 percent for fiscal 2000 would be realized.
"I know nothing about the figure, but it's a tossup as to whether we see growth of 1.2 percent," he said.
The Cabinet Office is slated to release gross domestic product data for fiscal 2000 on Monday.