The Japanese government said Tuesday that its economy is expected to grow a real 2 percent in fiscal 2007, while the growth projection for the current fiscal year was lowered to a real 1.9 percent.

The world's second largest economy, measured by gross domestic product (GDP), will see expansion for the sixth consecutive year in fiscal 2007 starting from April 1, the Japanese Cabinet Office said in an annual outlook report.

The corporate and household sectors will continue to improve as the global economy will remain on a steady recovery track, the report said, fueling the Japanese economy to a 2 percent growth in fiscal 2007.

However, the government meanwhile revised downward its economic growth estimates for the current fiscal year to a real 1.9 percent from a projection of 2.1 percent earlier this year, mainly due to weakening personal spending, which accounts for more than half of Japan's GDP.

According to the report, the average unemployment rate is likely to drop to 4 percent in fiscal 2007, slightly lower than the 4.1 percent projection for the current fiscal year.

Last fiscal year, Japan experienced a 2.4 percent economy growth.