Bank of Japan Gov. Masaaki Shirakawa said Monday the economy is likely to experience a "mild recovery" as exports and production improve, though the outlook remains fraught with "considerable uncertainties."

"The sharp decline in economic and financial conditions in Japan and abroad since last autumn is starting to level out, and there is a prospect of a mild recovery ahead," Shirakawa said in a speech in Kanazawa, Ishikawa Prefecture.

He said "severe economic conditions" will continue as the world adjusts from an excess of debt and consumption built up during the mid-2000s, a period marked by low inflation and interest rates.