The economy most likely contracted in the April-June period, despite logging remarkable growth of 1.9 percent during the first three months of the year, Economic Planning Agency chief Taichi Sakaiya said Friday at the Japan National Press Club in Tokyo.
"Achieving positive (growth) figures for two consecutive quarters would mean the economy is enjoying very prosperous conditions," Sakaiya said, adding that he does not perceive the economy as being so rosy.
Although the worst is over and there are signs of recovery, Sakaiya maintained a cautious stance on future prospects, citing sluggish capital investment in the private sector and patchy consumer spending.
After Sakaiya repeated the Cabinet's stance that a second supplementary budget would depend on the second-quarter gross domestic product figures for mid-September, he said an increase in public investment would be necessary since the government's public works spending is running out.
On Wednesday the Diet approved a 519.8 billion yen budget, the government's first for the current fiscal year, aimed at reducing unemployment.
The EPA chief added that the government should invest more of the supplementary budget in promising long-term public projects concerning information and telecommunications, the environment and the social welfare of the rapidly aging population.