Economic and Fiscal Policy Minister Kaoru Yosano told reporters he was "not confident at all at this moment" the economy will grow in the next fiscal year beginning April 2009, Kyodo news service reported.
The report said Yosano already had suggested the economy may shrink in the current fiscal year ending next March.
Government figures released Monday showed the GDP contracted a further 0.4 percent in the July-September quarter from the earlier quarter, for a second straight quarterly decline blamed on slower capital investment and weak overseas demand. The two straight quarterly contractions pushed the country into recession.
Yosano, asked why he believes the economy may experience negative growth next year, said, ''Looking at conditions at home and abroad, it is difficult to find factors that would contribute to turning (the GDP) into positive territory."
Some private-sector economists have said they expect the economy to contract both in the current and next fiscal years, the report said.
"The economic forecast will become a basis for the budget compilation and we have to face up to the reality,'' Yosano was quoted as saying.