Japan's GDP growth blew past analysts estimates for the first quarter, giving a boost to Prime Minister Shinzo Abe's reform efforts, dubbed 'Abenomics'.
The economy grew at an annual rate of 3.5 percent in the first three months of 2013 as consumers increased their spending and exports to the US picked up, Japan's Cabinet Office said Thursday.
The figure exceeded analysts' expectation of 2.7 percent growth of gross domestic product.
The strong growth figures are a welcome relief in Japan after last year's sluggish 1 percent growth rate and 15 years of deflation.
Prime Minister Shinzo Abe made economic reforms a cornerstone of his political campaign and followed through since taking office in late December.
"Japan is clearly back from stagnation last year," Naoki Iizuka, an economist at Citigroup Inc. in Tokyo told Bloomberg.
"The key from here is whether Abe can unveil a strong growth strategy. If he succeeds, that will boost business investment to support growth."
Japan's parliament approved a record-high 92.6 trillion yen ($906.2 billion) budget for this fiscal year late Wednesday. The budget raises military spending for the first time in more than a decade and increases public works spending to help revive the economy.
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Next month, Abe is set to release his so-called "third arrow" of economic reform that's designed to tackle structural problems.
Abe's first two "arrows" of monetary and fiscal stimulus seem to be taking effect in the world's third largest economy.
"Starting with a rise in consumer spending, the effects of the economic policies of (Prime Minister Shinzo) Abe's cabinet are beginning to be seen," economy minister Akira Amari said after the release of the data.
Abe has promised that the last "arrow" of Abenomics make the labor market more flexible with more immigrants and women in the workforce.