Finance Minister Shoichi Nakagawa's abrupt resignation over his wobbly performance at a news conference in Rome is feared to further drag down the economy, having shaken the "control tower" of Japan's economic policies.
Nakagawa, who doubled as financial services minister, will be replaced by economic and fiscal policy minister Kaoru Yosano, 70, who will now hold three posts, Prime Minister Taro Aso said.
Economists are worried that the exit of the minister who was instrumental in mapping out economic policies will deal a serious blow to the already embattled economy, which posted the sharpest contraction in 35 years, or an annualized real 12.7 percent, in October-December 2008.