Japan's economy is expected to make its sharpest rebound in decades this year, with consumption set to pick up toward the end of 2021 as the impact of the COVID-19 pandemic on the broader economy eases.

The world's third largest economy is projected to grow 3.42% in the next fiscal year, which will run to March 2022, after shrinking 5.37% this fiscal year, according to an average of forecasts by 35 economists polled by the Japan Center for Economic Research.

If the estimate is borne out, it would see a turnaround from the economy's worst contraction to its highest growth since fiscal 1995, when comparative date became available.