TOKYO, July 2 - A top official in Japan's dominant Liberal Democratic Party (LDP) said on Monday the country's economy was in a downward phase, warning that a deflationary spiral was possible if conditions worsened.
"We are determined to avoid minus growth," LDP Secretary General Taku Yamasaki, a key supporter of Prime Minister Junichiro Koizumi, said in a speech in Tokyo.
He added that economic policies from now on would be focused primarily on monetary and tax policies.
Most economic data over the past few months have highlighted the uncertainty for Japan's economy, currently stuck in its worst post-war downturn.
On Monday, the Bank of Japan's (BOJ) "tankan" survey of business sentiment for June produced a headline figure of minus 16 for the sentiment diffusion index (DI) reading for large manufacturers, diving from minus five in March when the DI worsened for the first time in nine quarters.
Koizumi and his ministers have warned of weak economic growth in the coming two years as the country steps up its plans of reforms.