The Japanese economy is expected to grow about 1.7 percent in real terms in fiscal 2016 starting next April, led by recovering consumer spending and solid capital investment, the government said Tuesday.

In nominal terms, gross domestic product will likely expand around 3.1 percent in the next fiscal year to around ¥518.8 trillion ($4.3 trillion), the highest level in 19 years since fiscal 1997, when GDP totaled ¥521 trillion.

The projected GDP will surpass ¥513 trillion marked in fiscal 2007, before the financial crisis triggered by the collapse of investment bank Lehman Brothers Holdings Inc.