Photo/IllutrationPeople walk by an electronic stock board at a securities firm in Tokyo on Dec. 9. (AP Photo)

Japan's economy expanded at a faster than earlier estimated annual rate of 1.8 percent in July-September, powered by stronger consumer purchases and corporate investment ahead of an Oct. 1 tax hike.

However that tax increase is expected to hurt growth in coming months.

The data issued Monday were a revision of the earlier reported 0.2 percent growth in the last quarter. The quarterly rate of expansion was 0.4 percent.

The world's third largest economy has marked four straight quarters of expansion. The better results reported by the Cabinet Office also reflect a less severe drop in exports than preliminary reports suggested. However economists are forecasting much weaker growth in the October-December quarter.

A Bank of Japan measure of consumer demand showed a 7.4 percent drop in October following the increase in the sales tax to 10 percent from 8 percent. That “points to a sharp fall in private consumption in the fourth quarter,” Marcel Thieliant of Capital Economics said in a commentary.

“We are more pessimistic about the outlook for global GDP growth than most analysts and therefore think that external demand will remain weak," he said. “The upshot is that we expect GDP growth to shrink by 0.2 percent next year."