THE JAPANESE GOVERNMENT has confirmed that the country’s economy has come to a standstill, as the strong yen continues to grow.

The BBC reports that the Japanese Cabinet Office said in a monthly statement that the economy was “pausing”. A strong yen and lower demand has been blamed for the downgrade in outlook.

The statement is the most negative comment passed by the government in the past two years.

The yen strengthened to a 15-year high against the dollar in recent weeks. However, the decision the Japanese finance ministry to intervene in the currency markets for the first time in six years had little effect.

Prime Minister Naoto Kan has also approved a 5.1tn yen (€45.6bn) stimulus package in the hope of protecting exporters, who have been hit hard by the poor exchange rate.

Reuters reports that government officials have said that a return to recession could not be ruled out for Japan. The news agency quoted a senior official at the Cabinet Office as saying:

If the economy turns out as expected in our main scenario, we may end up describing the current situation as a soft patch.

But if it comes under further downward pressure, it could end up slipping into recession.