Japan announced on Tuesday that it is upgrading its economic growth forecast to 2.6 percent for the year leading to March 2011, coming from an earlier projection of 1.4 percent and enabling the troubled nation to achieve a gross domestic product (GDP) growth beyond the two percent mark.

The Japanese government said that the predicted GDP expansion should be the first upward movement since 2006 as it revealed that for the fiscal year leading to March 2012, the forecast growth should reach 2.0 percent.

In its biannual report, the nation's Cabinet Office said that "government's stimulus packages, strengthening in business profitability and improvements in employment and household income are spreading to an increase in private demand."

The Japanese government also revealed plans to institute a long-term fiscal management policy that would aim to achieve a primary balance surplus by fiscal 2020, as Tokyo slowly implements measures that would aid it to dodge a debt crisis similar to the Greek debt issue.

The government has acknowledged that gaining surplus in the primary balance, which is the budgetary balance that excludes payments for national debts, is important in its goal to curb mounting government debt.

The country's mountain of public debt currently stands at around 200 percent of GDP, which is the highest reached so far by any industrialised nation and Japanese Prime Minister Naoto Kan vowed earlier this month that he will introduce a fiscal policy overhaul that would reduce the massive debt.