Japan's central bank has lifted its growth forecast for Asia's biggest economy and predicted the country will emerge from deflation in the 2011 financial year.
The Bank of Japan forecast that gross domestic product would rise 1.8% in the current financial year, which runs to the end of this month, up from its January forecast of 1.3%. It predicted growth of 2% for the next financial year.
Deflation, which has long been a drag on the economy, will end in the next financial year, when prices will rise 0.1%, the bank said. This was a change from its earlier prediction of a 0.2% drop in prices.
The bank said that while government stimulus measures would gradually wane, strong demand in emerging economies would help Japan's exporters.
Earlier, the Bank of Japan kept its main interest rate unchanged at 0.1%, as widely expected, maintaining its easy policy stance to help boost Japan's economic recovery.
