Japanese growth beat expectations, with the economy expanding at one per cent in the second quarter, it was announced earlier this morning.
Gross domestic product rose by an annualised four per cent from April to June, the largest increase since the first quarter of 2015.
Median expectations were 0.6 per cent for the quarter and 2.6 per cent on an annualised basis.
It is the sixth straight quarter the Japanese economy has grown, and the last time this occurred was between 2005 and 2006.
Consumer spending and capital investment rose at their fastest rates for more than three years. Private consumption increased by 0.9 per cent, almost double median expectation of 0.5 per cent.
Meanwhile, capital expenditure jumped by 2.4 per cent in the three months to June, compared with a 1.2 per cent increase pencilled in by economists and analysts.
Japanese stock markets fell in the wake of the news, with the Nikkei closing nearly one per cent down, and the yen weakened, trading at 109.74 per US dollar.
Analysts from Daiwa Capital Markets highlighted the Japanese economy has now grown by almost seven per cent since Prime Minister Shinzo Abe took office in 2012.
Pantheon analysts wrote in a note this morning: "We got the headline number wrong." They added:
We thought the mismatch between slumping exports and booming imports was partly justified by strong domestic demand but exporters would end up holding onto unwanted goods in inventory. In the event, it seems likely that exporting businesses are even further behind the reality of the Asian trade slowdown than we thought.
However, given the figures are subject to revision, Pantheon analysts believe the good news could be tempered.
"We expect the GDP number to be revised down and that growth in the second half will weaken."