Dismal reports may leave Japan’s economy and related exchange traded funds (ETFs) feeling a distressing sense of déjà vu.

The International Monetary Fund (IMF) estimates that Japan’s economy will contract 6.2%, reports Takashi Nakamichi for The Wall Street Journal. This worsened forecast comes after the news of an ongoing global downturn, increases in unemployment and reduced consumption. Japanese exporters are also suffering from an appreciating yen and general tight credit.

It is expected that the output gap could reach 8% in 2009. This wide gap usually indicates weak demand and oversupply, which would send prices falling and hamper growth.

The government had announced a new stimulus package, and the country’s budget is calculated to be 10% of its GDP in 2009 with net debt around 100% of GDP this year.

The Bank of Japan made downgrading economic assessments in seven of nine regions, according to ChinaView. Economic conditions are down with business sentiments and capital investments both dropping as a result of diminished exports and corporate profits.

On an optimistic note, the Japanese whiskey industry is doing quite well and producing quality beverages to satisfy the palates of connoisseurs. International awards are being presented to Japanese distillers, more notably Suntory and Nikka, and have now made these distillers international competitors, writes Justin McCurry for the Guardian.

• iShares MSCI Japan Index (EWJ): down 11.1% year-to-date

Max Chen contributed to this article.

Tags: Asia, EWJ, Global ETFs, Japan