The government on Monday cut its economic forecast for fiscal 2009 to a post-war-worst contraction of 3.3% from the earlier predicted zero growth as the deepening global slump continues to undermine the economy, and Finance Minister Kaoru Yosano warned that a further downgrade is possible.

The Cabinet Office said it downgraded the estimate for the current fiscal year, which began earlier this month, as the economy 'has been deteriorating at an unprecedented speed,' particularly since the latter half of fiscal 2008.

Japan Times