RTTNews - There are some signs of recovery in the Japanese economy due to stimulus measures, but rising number of unemployed may risk the revival, the Cabinet Office said Friday.

According to the fiscal 2009 white paper on the economy and government finances, the world's second largest economy is still facing downside risks like, deflation, unemployment and slowdown in overseas economies.

For a full-fledged economic recovery, growth in both exports and personal income is very important, the report said. But, a fall in industrial production put companies under pressure to fire more workers.

Japan's exports collapsed at record pace due to sluggish demand from across the world. Companies were reluctant to hire and to make new investment in the wake of weak demand.

The economy is expected to grow in the second quarter if an improvement in demand supports exports and output.

Further, the report urged the Bank of Japan to offer its best for the economy to return to sustainable growth.

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