Japan's Cabinet Office downgraded its growth outlook on Friday. It said that the country's economy continued to recover moderately, but added "slowness can be seen in some areas". These areas are private consumption and exports.

"The economy's undercurrent continues to recover moderately and factors to strengthen the move are being put into place," Economic and Fiscal Policy Minister Akira Amari said.

The government said that there are downside risks to the outlook such as the slowdown in emerging Asian economies and the process of normalizing monetary policy in the U.S.

The government pointed out that it will closely monitor fluctuations in the financial and capital markets.

It was the first downward revision since October 2014.