The sluggish Japanese economy is unlikely to recover for some time, the Bank of Japan has said.

On Monday, the central bank maintained a gloomy outlook in its report on the state of the Japanese economy in February.

"Economic activity remains flat amid substantial uncertainty about the outlook for the economy," the Bank of Japan said.

Meanwhile, separate research showed that corporate bankruptcies fell in January for the first time in two months, but the debts of such companies increased to the highest for any January in the post-war era.

Independent research firm Teikoku Databank said 1,436 companies collapsed in January, a drop of 11% from a year earlier and a 7.8% fall from December.

But the number of bankruptcies is expected to remain high towards the March end of the fiscal year, with limited financial support from the government.

Export could trigger recovery

In its monthly report, the Bank of Japan left its overall view of the economy unchanged for the third straight month running.

The report said net exports - exports minus imports - and industrial production were flat in February.

The Bank said that due to a slowing US economy and weakness in European economies, it expected little growth in exports while industrial production would also stay flat.

The report said rising oil prices and a planned increase in medical costs from April would slow the pace of a decline in consumer prices.

Last November, the Bank of Japan downgraded its assessment of the state of the economy for the first time in almost a year, citing the effects of a weak US economy on Japan's exports and production.

The February report said the economy could show signs of recovery later in the year, provided overseas economies showed a modest improvement.

This could lead to a rise in exports and trigger production growth.

On Friday, the Bank of Japan's Policy Board decided not to change interest rates but it said it would stand ready to supply more liquidity if financial markets became unstable ahead of the end of the financial year on March 31.

Japanese prime minister Junichiro Koizumi has said he will name a successor to the outgoing central bank governor Masaru Hayami by the end of the month.