The Bank of Japan expects the country’s economy to contract by 3% to 5% this year — a sharp departure from its forecast at the start of the year, which predicted slight growth.

The economy “is likely to remain in a severe situation for the time being due to the impact of the spread of the novel coronavirus at home and abroad,” the central bank wrote in a statement released Monday as it concluded a shortened policy meeting.
While it said Japan’s economy is likely to improve as the outbreak wanes, the central bank added that “future developments are extremely unclear.” Officials had earlier predicted growth between 0.8% and 1.1% for 2020.

The Bank of Japan kept interest rates steady Monday at its policy meeting, which usually lasts two days but was shortened to just half a day this month. But it did announce more easing measures as it tries to offset economic fallout from the coronavirus pandemic and address corporate funding strains.

The central bank said it would now buy an unlimited amount of government bonds, scrapping an annual cap of 80 trillion yen ($745 billion). The move was largely symbolic, since the central bank has in recent years been buying about a quarter of that amount annually, so it had a lot of room to increase its purchases even without removing the cap.

However, Monday’s announcement sends the message that Japan will do whatever it takes to shore up its economy. Japanese Prime Minister Shinzo Abe has already committed roughly $1.1 trillion to protecting the country from virus-related fallout.

Japan’s economy had been flirting with recession even before the outbreak. The world’s third-largest economy shrank in the fourth quarter of 2019 as it absorbed a sales tax hike and grappled with the aftermath of Typhoon Hagibis, a powerful storm that hit the country last fall.

Japan will report first quarter GDP next month.