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Japan's cabinet office on Friday lowered its growth forecast for the current fiscal year to an expansion of 0.7 per cent in inflation-adjusted real terms, down from a previous projection of 0.9 per cent in July. 

The downward revision reflected delays in the recovery of automobile exports, impacted by certification-related issues with certain manufacturers.

The new forecast, released by the government at a meeting of the Council on Economic and Fiscal Policy, was also slightly below last year's growth rate of 0.8 per cent, Xinhua news agency reported.

The cabinet forecast that consumer prices could remain high, with consumer price index expected to increase 2.6 per cent this year following a three per cent rise last year.

Looking ahead, the cabinet expected the economy to grow 1.2 per cent next fiscal year, supported by a recovery in private consumption and steady corporate investment.