Japan's economy expanded by 1.2 per cent in the third quarter, the second consecutive quarterly rise, the government said Monday.

The figure for the July-September period beat Kyodo news agency's forecast of a 0.6 per cent rise in gross domestic product.

GDP, or the total value of the nation's goods and services, rose at a revised annual pace of 2.7 per cent in the April-June period after posting a record decline in the first quarter.

Driving the third-quarter economy was a 1.6 per cent increase in capital spending by companies, bolstered by recovering global demand.

Deputy Prime Minister Naoto Kan said the figures reflected the ongoing economic recovery in Japan and the world, Kyodo reported.

Emergency spending by governments around the world has kickstarted demand, particularly in China and the rest of Asia. Exports jumped 6.4 per cent from the April-June period, Japan's Cabinet Office said.

Domestic stimulus measures and consumer incentives to buy eco-friendly products have also helped. Consumer spending, which accounts for about 60 per cent of Japanese GDP, rose 0.7 per cent from the second quarter.

With files from The Associated Press