Japan's economy expanded more than expected in the third quarter as exports offset slack consumer spending, government data showed Monday, offering up some rare good news for the country's struggling growth project.

The world's third-largest economy expanded 0.5 percent on-quarter between July and September, and 2.2 percent gain on an annualised basis, the Cabinet Office said.

That easily beat market expectations for a 0.2 percent growth rate, or an annualised rate of 0.8 percent.

Japan's economy contracted in the last three months of 2015, before bouncing back in January-March with a 0.5 percent rise quarter-on-quarter and 0.2 percent expansion in April-June.

The wobbly trend has put Japanese officials under pressure to deliver as economists increasingly write off Prime Minister Shinzo Abe's attempts to cement a lasting recovery.

His spend-for-growth policy, dubbed Abenomics, boosted stock prices and pushed down the yen, helping Japanese exports.

But the yen, often bought as a safe haven in times of uncertainty, had been on the upswing since the start of the year, and got a big bump after Britain's shock vote to exit the European Union.

It has recently weakened against on the dollar after billionaire businessman Donald Trump's election as US president, offering up some good news for Abe's administration.

On Monday, the Japanese currency was around four-month lows against the greenback, brightening the outlook for exporters in the coming months.

It bought 107.28 yen in Tokyo morning trading.

"Third-quarter (growth) was a positive surprise, it should be a relief for Japanese policymakers," said Kohei Iwahara, an economist at Natixis Japan Securities.

"However exports are making all the growth, mainly due to a pick-up in the eurozone, so it could a one-off windfall. I would expect a slowdown in the fourth (quarter)."

- 'Many uncertainties' -

There are concerns about the impact of Trump's presidency, including the possible derailing of a trade pact that is pillar of Abe's plans to revive growth.

Trump has expressed strong opposition to the Trans-Pacific Partnership (TPP), a 12-nation agreement spanning some 40 percent of the global economy.

The US and Japan are the two biggest members, but the trade deal became a hot-button issue during the US election campaign, with critics including Trump saying it would cost American jobs.

It has been signed but is yet to be ratified by lawmakers in the US, while Japan's lower house of parliament passed it last week.

On Monday, Abe repeated his support for the trade pact and vowed that "it's not over at all".

"It is important to show our country's will... at a time when protectionism is about to spread," he told parliament.

Abe came to office in late 2012 and launched a growth plan -- a mix of massive monetary easing, government spending and red-tape slashing.

But promises to cut through red tape have been slow, and Abe's plan to buoy Japan's once-booming economy have looked increasingly unrealistic.

His spend-for-growth policies have set Japan apart from some of its rich nation counterparts, including Germany, which has been reluctant to endorse them, seeing it as an ineffective way to stimulate the economy.

This month, Japan's central bank again pushed back the timeline for hitting its inflation target, the latest policy change that has raised questions about Abenomics.

The Bank of Japan has for more than three years embarked on a bond-buying stimulus programme to try to keep interest rates ultra-low and increase borrowing and spending.

But the bank said it now expects to hit two percent inflation by March 2019 -- four years later than its original target.

Source: AFP