According to the Cabinet Office the economy in Japan had ceased "pausing" and is now at a "turning point." It also said that if macroeconomic data next month continues on a downward trajectory, it will downgrade its assessment of the economy to "worsening."

The consensus among economists here is that as the Ministry of Economy, Trade and Industry has said that industrial output is likely to have fallen this month by 1.5 percent and eight of eleven regional economies have reported a downturn, the "worsening " assessment is likely to be declared.

The government has pointed to a weakness in overseas demand, the expiry of government subsidies for eco-friendly car purchases, and the yen's strength as battering Japan's manufacturing sector and contributing to Japan's quick-shrinking economy.

In addition, state officials and economists have noted that frosty ties between Japan and China over islands controlled by Japan but claimed by China in the East China Sea, have also contributed to slumping production here, due to waning demand for Japanese products from consumers in China, Japan's biggest trading partner.

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