Japan's economy grew at an annual pace of 5.4 per cent in October-December, boosted by improved consumer spending and exports, the government said on Tuesday.

Japan's real gross domestic product, or GDP grew 1.3 per cent from the previous quarter, according to Cabinet Office data.

Growth got a boost after measures to curb the spread of coronavirus infections were lifted last year. The restrictions asked restaurants and bars to close early and large-scale events to be cancelled or held with limited crowds.

The future remains uncertain, as the restrictions have come back lately in most parts of Japan, including Tokyo, as the fast-spreading omicron variant has infections and deaths surging.

The latter part of last year had seen people starting to travel again, and go out dining and shopping, before the latest surge. Japan also trails other developed countries in administering vaccination booster shots, at about 10 per cent of the population.

For 2021, the world's third-largest economy grew 1.7 per cent, marking its first growth in three years. That positive number reflects a rebound from a stagnated economy hurt by Covid-19 in 2020. Japan's economy shrank in 2020 and 2019.

During 2021, the economy contracted at an annual rate of 2.7 per cent for the July-September quarter and grew at an annual 2.4 per cent rate during April-June.

The annual numbers show how the economy would have grown if the quarterly rate continues for a year.

For the quarter ending in December, domestic demand grew 1.1 per cent on the back of healthy consumer spending. Exports also grew.

Strong recovery

Takayuki Toji, economist at SuMi TRUST, said the latest data show a strong recovery because of increased consumer spending as well as an uptick in exports and capital investment on the back of production returning, mainly in the auto industry.

A supply crunch in semiconductors had stalled production. Although that has eased somewhat, supply constraints have returned, putting pressure on investment and exports, Toji said ''We expect the economy to slow down once again this quarter due to an increase in COVID-19 infections,” he said.