Japan's economy will probably shrink 1.25 percent this year amid expected world growth of 1.5 percent as the global economy recovers slowly from last year's downturn, according to a U.N. report released Thursday.
The World Economic Situation and Prospects 2002 says Japan's economic woes reflect a "deepening slowdown" in external demand and structural problems, warning that recovery in Japan is not likely to occur anytime soon.
"Measures for resolving bad loans and improving public finances may exacerbate the cyclical contraction in the short term," the U.N. report says, adding that monetary easing has so far had little effect in lifting the economy.
The Japanese economy, which grew a moderate 2.4 percent in 2000, contracted an estimated 0.7 percent last year, the report says.