The government plans to raise its economic growth projections in fiscal 2006 to a real 2.1 percent and nominal 2.2 percent, both up 0.2 percentage point from January's estimates, government sources said Friday.
The upward revision reflects strong personal consumption and corporate capital spending, they said.
While the revised real economic growth estimate of 2.1 percent for fiscal 2006, which ends next March, is still way below the 3.2 percent marked in fiscal 2005, the new nominal growth estimate of 2.2 percent is the highest since fiscal 1996.
Meanwhile, the gross domestic product deflator, a key price indicator, is projected to post a 0.1 percent rise in fiscal 2006, unchanged from January's estimate, the sources said.
It would be the first rise in the GDP deflator in nine years, indicating the economy is likely to overcome deflation within the current fiscal year.
The Cabinet Office plans to use the revised economic projections for working out the budget request ceilings for fiscal 2007, the sources said.
The economy is continuing a well-balanced recovery led by private-sector demand, they said.