A decline in exports will slow the pace of economic recovery by slowing industrial production, the Bank of Japan said Monday in a monthly report.

"Japan's economy continues to recover gradually, but the pace is slowing due to decelerating export growth," the BOJ said in the Report of Recent Economic and Financial Developments. "A temporary decline in exports seems to be inevitable."

While not a downward revision, Monday's report reflected the increasingly cautious stance of the bank's policy board members on the economic outlook, a BOJ executive official said.