Japan’s government slashed its forecast for this year’s economic growth by a third on Wednesday, as Yasuo Fukuda, the prime minister, apologised for the damage caused by a badly timed tightening of house-building standards.

The Cabinet Office said it expected real gross domestic product in the world’s second-largest economy to grow by just 1.3 per cent in the fiscal year to March 2008, down from an earlier projection of 2.1 per cent growth. The tighter building regulations introduced this year, which led to a sharp drop in housing starts, are expected to wipe 0.6 percentage points off growth.