The Organisation for Economic Co-operation and Development (OECD) on Tuesday foresaw Japan's economy growth at between 1.5 and 2.0 percent in 2005 and 2006, slowing down from 2.6 percent in 2004.

"Despite the headwinds from mild fiscal contraction, the economy is projected to expand between 1.5 and 2.0 percent in 2005 and 2006, a rate above the latest estimates of Japan's potential growth," it said in its twice-yearly economic outlook.

The OECD also predicted Japan's jobless rate at 4.4 percent in 2005 and 4.1 percent in 2006 falling from 4.7 percent in 2004.

It also and said that Japan's central bank should maintain its ultra-loose credit policy to end the price drops, the 30-member organization said.

"Further gains in employment, accompanied by rising wages, should support private consumption growth," it said, adding "Increased profits in the business sector ... are expected to sustain business investment, though at a slower pace."

The OECD also warned that a delayed pickup in world trade or a significant appreciation of the yen would slow growth.

Source: Xinhua