Japan's central bank has downgraded its economic assessment for the seventh consecutive month, highlighting a slump in exports, investment and consumer demand.

"Japan's economy is worsening broadly, as private consumption is weakening in addition to a decline in exports and business investment," the Bank of Japan said in its monthly economic report for December.

The downgrade had been expected after the BOJ decided to pump more money into the economy on Wednesday through government bond purchases and other measures.

Government projections on Wednesday predicted Japan's economy will not grow in the fiscal year starting in April after shrinking 1% this year.

Japan is in its third recession in a decade, after the economy shrunk 0.5% in the third quarter.

Unemployment is at a record 5.4% and corporate failures at an all-time high.