The government is compiling its economic forecast for fiscal 2009 with zero growth in terms of real gross domestic product, sources have said.

Japan last forecast zero growth for fiscal 2002, when the economy contracted in response to the collapse of the information technology bubble.

The latest projection, set to be announced by the government next week, comes as economies around the world face severe conditions.

The government economic forecast is used in drawing up the budget.

The economy is certain to post negative growth in fiscal 2008, ending next March, and the zero forecast for fiscal 2009 will signal that the outlook is bleak.

Japan Times