(RTTNews) - Monday, the Bank of Japan Governor Masaaki Shirakawa said the conditions of the world economy have become more severe.

With regard to the recession in the US, the Japanese central bank chief said, “In any event, it is likely that the current recession may become the longest in the postwar era, longer than the 16 months recorded in the periods 1973 to 1975 and 1981 to 1982″.

He delivered a speech to the Board of Councillors of Nippon Keidanren, a leading business federation, in Tokyo.

According to Shirakawa, the current deterioration in economic conditions around the globe can be viewed basically as part of the process of correcting the “excesses” that accumulated during the period of the credit bubble.

Regarding the Japanese economy, Shirakawa said the economy recovered in the past with the support of high growth in overseas economies. “However, the current situation is difficult in that this time the outlook for the world economy is highly uncertain”.

The central bank governor said economic conditions in Japan have recently been deteriorating. Earlier in the day, the government cut its assessment on the economy saying, “economy is worsening”.

Reiterating the view mentioned in Bank of Japan’s December monthly report, released on Monday, Shirakawa said economic conditions are likely to increase in severity for the immediate future.

He cautioned that responding to crises with excessive policy actions may lead to larger crises later on. The central bank chief said the phenomenon of the rise and bursting of bubbles in the world economy seems to have increased in frequency over the past two decades. He also noted that these have become visible across a wider range of economies.

Global financial markets remain under great strains, despite several measures taken in each country, Shirakawa said.

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Posted in Categories: Economy, Japan, Releases, USA.

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