'The US economy is slowing down at an accelerating pace. It is possible that Japan's economic growth will moderate temporarily because of the US,' Ms Ota said at a news conference.

She said she will monitor the possible impact of a slowdown in the American economy on Japan.

Ms Ota made the remarks when asked about the joint statement Saturday of the financial chiefs of the Group of Seven industrialised countries that acknowledged the risk of a US economic slowdown. But the statement projected that in the long-term the US economy will continue to grow.

The American economy - a vital export market for Japan - nearly stalled in the fourth quarter, growing at a pace of just 0.6 per cent. The odds of a recession have grown considerably over the last year, and an increasing number of analysts believe the economy may actually be shrinking now.

Those concerns, plus rising oil prices, market volatility and a global credit crunch have all caused analysts to speculate that Japan's economy will also slow. -- AP