Japan's economy is recovering on the back of rising consumer spending and improving corporate profits, Prime Minister Junichiro Koizumi said Friday while vowing to keep fighting deflation. "Without relying on government pump-priming, Japan's economy has been recovering on an improvement in corporate earnings and an increase in capital and consumer spending," he told parliament.
Koizumi's remarks came after the government formally adopted forecasts Friday of 1.6 % growth and a slight 0.1% inflation rate in the fiscal year to March 2006. This compared with estimates of 2.1% growth and a 0.1% fall in prices for the current year to March 2005. Koizumi said that substantial reforms had put the economy on a better footing to stage a recovery and vowed to continue with them to counter the threat of deflation.