Japan's economy performed beyond expectations in the third quarter with an increase in government consumption and domestic demand, the second preliminary reading from the Cabinet Office showed.

The country's third-quarter GDP growth was revised up to 0.4% from the initial estimate of 0.1%, and above the 0.3% rise in the previous quarter. The consensus estimate of economists polled by Econoday was for a 0.2% increase.

Government consumption grew 0.7%, while public investment increased by 0.9%. Exports dropped 0.6%, while imports rose 0.3%. Private demand ticked up by 0.6%, compared with the initially estimated 0.1% rise.

Private non-residential investment grew 1.8%, up from the initially estimated 0.9% rise.

On a seasonally adjusted annualized basis, GDP growth came in at 1.8% for the three months ending September, as opposed to the 2.0% rise recorded in the previous quarter and the Econoday consensus estimate of a 0.9% increase.

Japan's real GDP growth rate came in at 1.7% year over year in the third quarter, accelerating from the 0.9% growth rate recorded in the second quarter.

"While the upward revision is positive, we caution against seeing the [third-quarter] print as cause for optimism," Oxford Economics wrote in a note. "The overall outlook remains clouded as growth continues to struggle against subdued external momentum and weak domestic demand."