Japan's economy grew much more than expected in April-June to mark the third straight quarter of expansion, as robust private consumption and business investment offset the hit to exports from cooling global demand.
The data offers some relief for the Bank of Japan, which is under pressure to follow other central banks and ramp up stimulus to head off heightening global risks.
Gross domestic product grew at an annualized 1.8% in the second quarter, the Cabinet Office's preliminary data showed on Friday, far exceeding a median market forecast for a 0.4% increase. It followed a revised 2.8% gain in January-March.
Private consumption, which accounts for about 60% of the economy, rose 0.6% from the previous quarter to mark the third straight quarter of increase, thanks to brisk demand for cars and air conditioners, a government official told reporters.
Capital expenditure increased 1.5%, accelerating from a 0.4% rise in January-March and beating a median market forecast for a 0.7% gain, as companies invested in streamlining operations in the face of labor shortages.
Domestic demand added 0.7 percentage point to GDP growth, more than offsetting the 0.3 point negative contribution from external demand, the data showed.
On a quarter-on-quarter basis, GDP expanded 0.4%, compared with a median estimate of a 0.1% gain, the data showed.