Japan's Yosano: Economy could grow in 2010/11

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TOKYO, June 26 (Reuters) - Finance Minister Kaoru Yosano said on Friday the government will compile its budget for the fiscal year from next April based on an assumption that Japan's economy may post growth in that year.

He did not elaborate on the forecast, saying his staff is now looking into growth projections for next year.

The government's economic forecast for the current fiscal year, ending next March 31, will not be much different from a preliminary projection of a 3.3 percent contraction it predicted in April, Yosano said.

The government is expected to come up with a guideline on next year's budget next week. Yosano has vowed to keep cutting spending, including that on public works.

But the fate of any such guideline is murky, as the main opposition Democratic Party of Japan is regarded as having a strong chance of ousting the current coalition government led the by Liberal Democratic Party in an election that must be held in a few months. (Reporting by Hideyuki Sano; Editing by Michael Watson)