Japan's economy enjoyed a stronger than expected recovery in the first quarter of 2013.

It grew at a 3.5% annual pace as the government stepped up public works spending and eased credit to encourage investment.

The data for January to March showed the world's third-largest economy grew 0.9% on a quarterly basis.

This was the fastest pace in a year and compared with revised 0.3% growth in the final quarter of 2012, as Japan inched its way out of recession.

The figures were reported by the Cabinet Office overnight.

Prime Minister Shinzo Abe took office in late December vowing to help the economy recover from two decades of deflationary malaise.

His policies have helped push share prices to their highest levels in over five years, fueled by strong liquidity and expectations of improved profitability for listed companies.

A sharp decline in the value of the Japanese yen, brought on both by monetary easing and by expectations of further easing, has helped some exporters and provided a windfall in yen terms for companies repatriating overseas earnings.

But it is also raising costs for many companies that depend heavily on imports of natural gas and other commodities.

Japan's manufacturing and employment showed slight improvements in March, buttressing hopes that the economy may be headed for a moderate recovery.

The central bank, which is committed to 2% inflation within two years, says it expects a moderate recovery by midyear but has warned that uncertainties in the domestic and global economies could foil those hopes.