TOKYO – The Japanese economy recorded an annual growth rate of 0.9% in the July-September period, thanks to sustained consumer spending, according to government data released Friday.

The world’s fourth-largest economy grew 0.2% in the fiscal second quarter, marking the second consecutive quarter of expansion, following growth of 0.5% in April-June.

Seasonally adjusted gross domestic product, or GDP, measures the value of a country’s products and services. The annual rate shows how much the economy would have grown or contracted if the quarterly rate had held steady for a year.

Domestic demand grew at an annualized rate of 2.5%. Private consumption, which accounts for more than half of Japan’s GDP, rose 3.6% on healthy household consumption, according to preliminary Cabinet Office data.

Recent data shows that wages and employment are improving. Spending was lower than the previous quarter, in part because of bad weather that curbed spending and closed some factories. Recent income tax cuts have helped boost spending.

Exports increased by 1.5%. The weakening of the yen is a benefit for exports, as it tends to make Japanese goods cheaper abroad. But the impact was relatively limited in the last quarter. The Japanese yen was trading at the 160 yen level earlier this year. It is now trading at the 150 yen level.

Ahead of the last two quarters, the economy contracted by 0.6% in the January-March quarter after growing by 0.1% in October-December 2023, highlighting how the Japanese economy has recently foundered in periods of contraction between weak expansion.

“We believe that the Japanese economy will continue to grow gradually, supported by the growth of foreign economies,” said Katsutoshi Inadome, senior strategist at SuMi Trust.

He noted that the winter bonuses that many Japanese will receive in the coming months should also help strengthen domestic demand.

As for headwinds, Japan faces political uncertainty with Prime Minister Shigeru Ishiba having to survive a runoff this week to stay in power, but now faces emboldened opposition.

Unlike the United States and other developed countries struggling with inflationary pressures, Japan has struggled with years of deflation, or a steady fall in prices that underscores a fragile economy. Inflation stood at 2.5% in September.

Market observers are also focusing on the central bank’s next interest rate decision. The Bank of Japan has kept interest rates at or below zero for years to pull the economy out of deflation, but is gradually raising them.

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Yuri Kageyama is on X: https://x.com/yurikageyama