Japan's Economics Minister Heizo Takenaka said on Friday that Japan is on target to realise nominal GDP growth of two percent in fiscal 2006. Takenaka said Japan's economic recovery was on track despite the unexpected 0.3 percent fall in the country's industrial output in March from February. "We believe the Japanese economy is still on the right track (as it has been) for the past 6 to 9 months," he told a news conference in Singapore. The Japanese fiscal year runs from April to March. Takenaka said Japan was still experiencing deflation, but said it was moderating."The Japanese economy is still in moderate deflation. This view is shared by both the central bank and the government," he said. The minister also said that a sharp deterioration in relations with Beijing in recent weeks.