Japan's government says it expects country's economy to shrink 0.1% in the fiscal year through March 2012, grow 2.2% in following year; original forecast called for 0.5% current-year growth, 2.8% next-year growth

Cindy Allen

TOKYO , December 22, 2011 (Associated Press) – Japan's government lowered its economic growth forecasts as the country struggles with the yen's export-sapping strength and the fallout from Europe's debt crisis.

The Cabinet said Thursday it expects the economy to shrink 0.1 percent in the fiscal year through March 2012 and grow 2.2 percent in the following year as reconstruction efforts in the wake of the March earthquake boost demand.

The Cabinet had previously forecast the economy to grow 0.5 percent in the current fiscal year and 2.8 percent in the year through March 2013.

It said unemployment would fall to 4.3 percent from the 4.5 percent projected for this year.

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