Japan predicts zero growth in fiscal 2009

The Japanese economy will shrink this fiscal year and will manage only flat growth the following year, the government said on Friday, underlining looming fears about a global recession.

The Cabinet Office lowered its forecast for the nation's gross domestic product _ the value of goods and services _ for the fiscal year through March 2009 to a 0.8 percent contraction. In July, it had expected 1.3 percent growth. It expects growth to stay flat during the fiscal year ending March 2010.

The gloomy outlook shows the moderate recovery Japan has marked in recent years has been shattered by the U.S. financial crisis.

Nagayuki Yamagishi, strategist at Mitsubishi UFJ Securities Co. in Tokyo, said even the government's projection was too optimistic.

``Economies around the world are contracting and so Japan's economy is clearly going to contract,'' he said.