TOKYO -- The economic slump in Japan is easing, the central bank said, upgrading its assessment of the country's nine regions for the first time since 2006.

"Economic conditions continued to be severe, although they had recently begun to stop worsening," the Bank of Japan said in a quarterly report.

The upgrade was mainly due to rises in public investment, exports and production, it said.

But consumer spending "continued to be weak as the employment and income situation became increasingly severe," it added.

Bank of Japan governor Masaaki Shirakawa said the worst of the recession appeared to be over.

"Japan's economic conditions, after deteriorating significantly, have begun to stop worsening," he told a meeting of BoJ branch managers.

Private demand, however, was expected to decline further due to the weak labour market, while consumer prices were likely to keep falling, he said.

Asia's biggest economy shrank at an annualised pace of 14.2 percent in the first quarter of 2009, the fastest pace on record.

Analysts say any recovery is likely to be long and slow given the country's heavy dependence on exports to drive growth.

Copyright © 2009 AFP. All rights reserved