TOKYO (AFX-ASIA) - UBS Warburg chief economist Hiromichi Shirakawa said the deterioration in the Bank of Japan's Tankan survey was largely in line with expectations, with the headline number better than his own forecast. "These numbers have been largely expected and they are not a surprise; the question is how deep the economic downturn is going to be this time," he said. In the September Tankan survey, the large manufacturers' diffusion index (DI) came in at minus 33, compared with minus 16 in June. "It is a very weak number but when compared with (the crisis in December 1998) then it is slightly better," Shirakawa said. The index reached minus 51 in December 1998. However, Shirakawa said the indices are likely to worsen in the upcoming quarters. "We have to foresee a weaker number in December and March. I think (the BoJ's forecasts) are unrealistic. The forecast for December in the latest survey for large manufacturers is minus 31. "For the automakers there should be a big decline in December. Consumer confidence in the US has deteriorated substantially and consumer demand is weaker," Shirakawa said. "If the yen appreciates above 115 we can automatically expect a downgrade of profits. That is why the BoJ and (Ministry of Finance) have been acting so aggressively lately," he added. "There is no good news. We just have to hope that there is a recovery in global demand. All Japan can do is try to stop a significant appreciation in the yen, other than that there is nothing they can do." The central bank is unlikely to dramatically alter its monetary policy, other than through its existing moves to pump liquidity into the financial markets, Shirakawa said. "The BoJ is collaborating with MoF to keep larger levels of liquidity in the market. We are really cautious in foreseeing very aggressive monetary policy by the BoJ ... unless there is progress with government reforms." It is a case of "fastening your seatbelt in the short term," he added.