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Japan economy to grow 2.5% in fiscal 2013:

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TOKYO, Jan 28 AFP

January 28 2013, 1:52PM

Japan has unveiled its growth forecast for the fiscal year starting in April, saying the economy is on track to expand 2.5 per cent thanks to fresh stimulus and a recovery in key overseas markets.

Prime Minister Shinzo Abe's cabinet approved the forecast -- higher than an estimate of one-per cent growth for the current fiscal year to March -- on Monday morning, government officials said on Monday.

The forecast is slightly higher than estimates from economists who have also upped their forecasts on the back of a weaker yen, which helps exporters, and new government stimulus measures, Dow Jones Newswires reported.

Japan is also counting on a recovery in key markets overseas, including the United States and Europe, to fuel an expansion in the world's third-largest economy.

Last week, the Bank of Japan raised its growth forecast for the same fiscal year to 2.3 per cent from a previous 1.6 per cent estimate, as it announced an open-ended asset buying programme and new inflation target aimed at dragging Japan out of the deflation that has dogged its economy for years.

Abe, who took office late December after a landslide national election victory, unveiled a Y20.2 trillion ($A214.83 billion) stimulus package this month in the latest bid to stoke growth in the limp economy. The figure also includes local government and private-sector spending.

Tokyo's new forecast will be used to produce a fresh budget with Abe's cabinet set to endorse a Y92.6 trillion in spending on Tuesday, Japanese media reported.