Japan expects its economy will grow 1.6 percent in the fiscal year that begins April 1 because of higher corporate productivity, reduced government regulation and stronger consumption, the government said Thursday. The forecast for the gross domestic product, the total value of goods and services produced in a nation, was approved by the government's top economic policy panel and was unchanged from December. The government's annual report said consumer prices will increase slightly next fiscal year, easing fears of continuously falling prices, or deflation, which has been a major problem for Japan in recent years. "With the government and the Bank of Japan working in concert, deflationary pressures are gradually easing," the report said. But in an apparent warning to the central bank, the government said consumer prices must be taken into consideration with other economic factors. There have been worries that the Bank of Japan may raise interest rates _ now near zero _ too soon. The Bank of Japan has said it won't end the easy monetary policy until on-year changes in the consumer price index stay above zero. --more 1353 Local Time 1053 GMT
