Japan's economy has been picking up but any recovery is likely to be modest due to lingering caution over the COVID-19 pandemic, Bank of Japan Gov. Haruhiko Kuroda warned on Thursday.

The world's third-largest economy is confronting a resurgence in infections with the virus, with record cases reported in Osaka Prefecture, prompting authorities to enforce stricter measures against its spread.

Kuroda said the nation's economy was likely to improve, thanks to a rebound in global demand and the boost from the government's massive fiscal spending.