The country’s Cabinet Office said although the economy appears weak due to low exports, the employment situation remains good, and corporate profits are still high, along with private consumption.

The prediction, down from 1.7%, was announced on Monday at a meeting of the Cabinet Office’s Council on Economic and Fiscal Policy.

An official document from the council stated more attention should be given to the impact of trends in trade issues on the global economy, as well as China’s slowdown.

The government also predicted consumer prices will be 0.7% higher by the end of the fiscal year.

In October, prime minster Shinzo Abe plans to hike a sales tax to cover the costs of an increasing social security bill.

The move has already been delayed twice, first in 2015 after Japan entered a recession and again in 2017.

The Bank of Japan predicted on 29 July that the economy would continue to grow slowly, despite the effects of overseas slowdowns, although it warned Brexit and protectionist moves by the US remain risks.

And the planned sales tax hike could also damage the economy, the bank warned, depending on how consumers feel about the price rises that might follow.

Olympic-related spending ahead of and during the 2020 games in Tokyo will mean public investment is likely to increase.