Japan's economy grew 1.2 percent in the first quarter, the biggest expansion in three quarters, supported by solid exports to Asia and a stimulus-fueled recovery in consumption.
The expansion in gross domestic product (GDP) translates into an annualized increase of 4.9 percent, smaller than a median market forecast of 5.4 percent but above the 3.2 percent growth in the United States, data by the Cabinet Office showed on Thursday.
The upbeat data will be some relief to the Bank of Japan, which is considering drawing up a new loan scheme to encourage banks to lend more to industries with growth potential in what it describes as a long-term approach to beat deflation.
Private consumption, which makes up about 60 percent of the economy, grew 0.3 percent, partly due to a rush in demand for flat-screen television sets ahead of an April change in a government incentive scheme for low-emission electronic goods.
The economy also benefited from strong growth in Asia, with external demand contributing 0.7 percentage point to GDP.
Solid exports to Asia have helped Japan's economy recover gradually after pulling out of recession in the second quarter of last year.
But analysts expect growth to slow in the coming months as the effect of government stimulus measures on consumption begin to fade, and some Asian nations start to tighten monetary policy to avoid economic overheating.
(Additional reporting by Leika Kihara, Hideyuki Sano; Editing by Charlotte Cooper)