TOKYO, Japan - August 19, 2008 - The Bank of Japan delivered its bleakest assessment of the economy since the Asian financial crisis of 1997 and 1998 in a sign that a global slump ignited by the tight credit market in the United States might be spreading too quickly for Japan to avert recession.

Slowing global growth is hurting Japanese exports, the American economy will remain sluggish this year, and a decline in commodity prices from July’s record peaks may not mean the end of an era of surging raw material costs, the governor of the Bank of Japan, Masaaki Shirakawa, said.

The bank left interest rates unchanged at 0.5 percent in a unanimous decision on Tuesday. Mr. Shirakawa said its pessimistic assessment of the economy did not shake its belief in a recovery and signaled that the bank would keep its neutral policy stance.

The statement announcing the rate decision described the Japanese economy as sluggish - a term the bank last used in its assessment in May 1998, when capital was fleeing Asia after an asset-price bubble collapsed the previous year.