TOKYO (AFX-ASIA) - The Bank of Japan said it downgraded its overall economic assessment in December, citing weak consumption, exports and fixed investment. The bank downgraded its private consumption and earnings assessments. "Japan's economy is deteriorating broadly as private consumption is weakening in addition to a decline in exports and business fixed investment," it said, adding: "Japan's economy will inevitably continue to deteriorate for a while." "Net exports continue to decline and business fixed investment is also decreasing. Housing investment remains sluggish and public investment is on a downward trend. Moreover, private consumption is weakening recently." The bank noted that industrial output continues to decline considerably on weak demand and excess inventories, mainly in materials. "Corporate profits are sharply falling and business sentiment keeps on worsening," it said, although it added that information-technology inventory adjustments are taking place across the world. "Inventory adjustments in IT-related goods worldwide are showing steady progress and this has strengthened the view that adjustments will be mostly completed by around next spring," the bank said. "However, as final demand of IT-related goods still remains stagnant, a distinct recovery in exports of the sector is unlikely for the time being." The conditions for households also remain negative. "The weakness in household income is becoming noticeable on the decrease in the hours worked and the rise in unemployment, while consumer confidence is becoming cautious." The central bank left its assessment of price movements unchanged, although it remains cautious over the outlook. "Overall, prices are expected to follow a gradual declining trend for the time being. Moreover, given the high degree of uncertainty regarding future economic developments, the possibility that weak demand will further intensify downward pressure on prices warrants careful monitoring." The bank said the fallout from the Sept 11 attacks on the US continues to threaten a further slowdown. "Downward pressure may be exerted on Japan's exports and production once again depending on the developments in overseas economies such as the US," it said. "Business fixed investment is expected to follow a downward trend on the fall in corporate profits. Private consumption will also continue to be weak along with deteriorating employment and income conditions," it added.