The government downgraded its basic assessment of economy, saying the March 11 magnitude-9 quake and tsunami, which left nearly 30,000 people dead or missing, have caused serious downward pressure on exports, production and consumption.
"Although the Japanese economy was picking up, it shows weakness recently, due to the influence of the Great East Japan Earthquake," the Cabinet Office said in its monthly report.
It was the first time in six months that the Japanese government had downgraded its assessment. Earlier on Monday, the International Monetary Fund (IMF) had cut its forecast for Japanese growth.
Japan`s Economic and Fiscal Policy Minister Kaoru Yosano, however, said the negative impact of the disaster could be short-lived, Kyodo news agency reported.
His remarks came as workers of the Tokyo Electric Power Company (TEPCO) continued to remove highly radioactive water from the crisis-hit Fukushima Daiichi nuclear plant and cool a spent nuclear fuel pool.
A magnitude-5.8 quake also hit areas near the plant this morning, but it did not obstruct recovery efforts or cause any abnormalities, the government`s Nuclear and Industrial Safety Agency said.
TEPCO, the plant`s operator, kept pumping out highly polluted water from an underground tunnel-like trench to a nearby storage area inside the No.2 reactor`s building.
The critical work began last evening and an estimated 200 tonnes of tainted water was moved to a "condenser". The utility aims to transfer a total of 700 tonnes of polluted water by tomorrow.
Hidehiko Nishiyama, a spokesman for the government`s nuclear regulatory body, said that as a result of the operation, the levels of highly radioactive water that had been filling up the trench and the basement of the No.2 reactor`s turbine building was lowered by 4 to 5 cm this morning.
Nishiyama also said TEPCO sprayed some 195 tonnes of fresh water into a spent nuclear fuel pool at the No.4 reactor`s building, after finding out that the temperature of the water there was 90 C, much higher than the usual 20-30 C.
He said the radiation level in the air some 6 metres above the pool reached 84 millisieverts per hour before the water-spraying operation.
TEPCO is working to install seven steel sheets near a seawater intake for the No.2 reactor and set up "silt fence" curtain barriers near intakes for the Nos. 3-4 reactors at the six-unit plant to block the spread of radioactive substances in polluted water.