The slump in demand for the output of the powerful – and economically pivotal – Japanese export sector comes amid gloomy prognostications about the prospects for the world's second largest economy.

Japan's Cabinet Office yesterday cut its forecast for the third month in a row, declaring that the recession-mired economy was “worsening” in the face of the trade slowdown, falling corporate profits, rising unemployment and weak private consumption. “The economy is likely to continue worsening for the time being,” the Cabinet Office said.