The Cabinet on Friday endorsed the government's fiscal 2006 economic outlook, which projects that deflation will end during the year with the nominal growth rate outpacing real growth for the first time since fiscal 1999.

The outlook sets the growth rates for the gross domestic product at 2.0 percent in nominal terms and 1.0 percent in inflation-adjusted terms for the year through March 31, 2007.

The GDP deflator, a major barometer of price changes, is predicted to post a 0.1 percent rise, a turnaround from a 1.1 percent fall in fiscal 2005.

The outlook forecasts personal spending and corporate capital investment will show healthy growth and continue leading the expansion of the domestic economy, while overseas economies will also maintain firm growth.