TOKYO - Japan's economy will post tepid growth of just 0.1 per cent in the current financial year, much weaker than a previous forecast of 1.2 per cent, the central bank said on Friday.

Asia's largest economy will remain sluggish next year with growth of just 0.6 per cent, the central bank said, shortly after reducing its key interest rate for the first time in seven years to battle the financial crisis.

Previously it had anticipated growth of 1.5 per cent next year.

The Japanese economy shrank in the second quarter of this year and there are increasing fears that it is once again in recession, which is usually defined as two straight quarters of economic contraction. -- AFP