The Tankan business survey for large manufacturers in Q4 showed the largest drop in sentiment for three decades. While business sentiment outside manufacturing is bleak, the pace of deterioration is less dramatic compared with manufacturing. The development in the Tankan survey is consistent with a sharp contraction in the Japanese economy driven mainly by weak exports and corporate capital expenditures. Based on the development in Tankan, there is downside risk to our current GDP forecast and it is increasingly likely that the current recession will be at least as deep as the previous two recessions (see Chart 1).