The Japanese government has downgraded its assessment of the economy in the wake of the devastation caused by last month's earthquake and tsunami.
It said key areas of the economy would suffer, including industrial production and exports.
The decision marks the first time in six months that the government has downgraded its assessment.
On Monday, the International Monetary Fund (IMF) cut its forecast for Japanese growth.
"The economy is showing weakness recently due to the influence of the Great East Japan earthquake," the Japanese government said in its monthly economic report.
"It remains in a severe condition."
The disaster affected many companies which had operations in the north-east of Japan, destroying factories and blocking supply chains.
Electricity shortages caused by the crisis at the Fukushima Daiichi nuclear plant are likely to continue into the summer.