Japan on Tuesday cut its fiscal year growth forecast for the world's number three economy, blaming weak exports and rising imports as well as the impact of April's sales tax hike on consumer spending and business confidence.
The Cabinet Office said it now expects expansion of 1.2 percent in the year to March, compared with a previous estimate of 1.4 percent.
The announcement comes a week after the Bank of Japan also lowered its outlook to 1.0 percent from an earlier 1.1 percent.
Japan has seen widening trade imbalances since the Fukushima nuclear crisis in March 2011 forced it to switch off its atomic reactors and turn to pricey fossil fuel imports to plug the energy gap.
"The latest forecast was based on weak demand overseas and stronger-than-expected imports," a Cabinet Office official said of the downward revision.
The cut was also "due to weak domestic demand following the consumption tax increase in April", the official said.
However, the government said growth would bounce back to 1.4 percent in the following fiscal year as Prime Minister Shinzo Abe's policy blitz takes hold.
Abe last year launched a three-pronged plan to kickstart the economy, announcing huge public spending, largely on public works, while the Bank of Japan embarked on an unprecedented monetary easing plan to fight off debilitating deflation.
The moves stoked growth and drove a stock market rally, but Abe has so far made little progress on the so-called third prong -- promised economic reforms, including shaking up rigid labour markets and convincing more women to join the workforce.
Last week, the central bank held fire on fresh stimulus measures, saying Japan's economy was still holding up despite the tax rise, even as a closely watched BoJ report this month showed business confidence suffered its first deterioration in six quarters,
The levy hike was aimed taming Japan's massive national debt, one of the heaviest burdens among rich nations.