TOKYO. Nov 10: Japan downgraded its official assessment of the economy today for the first time in two years, highlighting threats from cooling economies in Europe and the United States to Japans fledgling recovery. reports Reuters.

The Economic Planning Agency (EPA) said its first down grade since September 1998 did not mean the economy was bracing for another downturn and stressed that a self-sustaining recovery was still within grasp.

'It looks like the good times are coming to an end and we have to be wary about that." EPA chief Taichi Sakaiya told a regular news conference.

He was speaking after the cabinet approved a supplementary budget worth 4.78 trillion yen (S44.59 billion) for the fiscal year to next March, most of which will help to finance its 10' economic stimulus package in a decade and is aimed at Bolstering the recov-

We have not changed our assessment that a moderate recovery continues. We Just have a sense of caution which is mon psy< hologic al rather than backed up by hard data Sakaiya said.

Sakaiya said he was concerned about uncertainty in offshore economies and that consumer and business sentiment had turned more cau-

The growth in exports is becoming flat and right now Asian economies are slowing. European and US economies are also declining. We need to be fairly concerned about what happens overseas.’ Sakaiya said.

The recovery trend remains intact.’ said Haruhito Arai, director of the EPA's domestic affairs section.

The EPA wanted to draw a sharp contrast between the robust recovery in corporate spending and the lagging household sector.