Tokyo  - Japan's economy was expected to stagnate in the coming fiscal year and would contract 0.8 per cent in the current one, the government said Friday.

It would be the first time in seven years that the world's second-largest economy would see zero-per-cent growth.

The Cabinet Office released the figures after it had also factored in the effect of a 75-trillion-yen (850-million-dollar) economic stimulus package it announced this fiscal year, which ends March 31.

The figures were lower than what the government estimated in July when it forecast real growth of 1.3 per cent in Japan's gross domestic product for the current year and 1.6 per cent for next year.

Since then, however, the global economic crisis has caused demand for Japanese goods to plummet both domestically and abroad.

In the past fiscal year, Japan's economy grew a real 1.9 per cent. (dpa)