Japan’s economy expanded last quarter at a faster pace than economists’ expectations, on strong consumer spending despite a stronger yen. The Japanese GDP grew at an annualized pace of 3.9 percent in the third quarter ending Sept. 30, according to data from the Japanese Cabinet Office released on Monday. The economy grew 0.9 percent during the quarter, surpassing the estimated 0.6 percent growth forecasted by Dow Jones in a survey of economists. The results were buoyed by consumer consumption, which accounts for more than 60 percent of Japan’s economy—leading the sales pack was the auto industry as consumers snapped up new automobiles ahead of the expiration of subsidies for environmentally friendly automobile buyers. “Now that the eco-car subsidies have expired, auto purchases are expected to see a reactionary decline,” Barclays Capital analysts wrote in a note to clients. Barclays expects the GDP to decline in the current quarter by 0.2 percent. Analysts expect corporate earnings to subside in the fourth quarter as a strong yen could dampen earnings by Japan’s large electronics sector, which depends on exports. Companies such as Sony, Panasonic, and Toshiba could see their overseas sales translate to smaller earnings in yen. Earlier this year, the Bank of Japan enacted an asset purchase program to inject more liquidity into the nation’s markets, as well as maintaining its interest rates close to zero.

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