TOKYO (AP) Japan’s economy grew more in the third quarter than initially thought thanks to higher spending by companies, the government said yesterday.

Real gross domestic product a measure of the value of all goods and services produced expanded at an annualised rate of 4.5 percent in the July-September quarter, up from 3.9 percent estimated last month.The upgrade underscores the solid growth that the world’s third biggest economy posted last quarter, but does little to change the fact that momentum is waning quickly.

The factors that fueled growth, including government incentives that fueled consumer spending on home appliances, have faded. Japanese companies are now grappling with a strong yen and uncertainties about the global economy. Slower growth in key overseas markets has cooled export demand, which has been a main driver of the recovery. Unemployment remains high by Japanese standards, and persistent deflation is weighing on growth.

Japan will be lucky to eke out growth in the October-December quarter. Many economists are predicting GDP to contract, snapping four straight quarters of growth. In a survey of 42 economists, the government-affiliated Economic Planning Association forecast Wednesday that GDP would shrink 1.9 percent in the fourth quarter.“We believe that the soft tone of the economy will linger toward early next year,” said Masamichi Adachi, senior economist at JPMorgan Securities Japan. Growth should bounce back in the second quarter next year because of stronger exports, he said.

Stronger capital spending pushed GDP higher in the third quarter, expanding 1.3 percent compared with 0.8 percent in the government’s preliminary report. Private consumption improved slightly to 1.2 percent from 1.1 percent estimated in November.

But speaking to reporters on Wednesday, Japan’s Economy Minister Banri Kaieda said the country’s economy was at a “standstill”. Earlier this week government data showed machinery orders a closely watched gauge of future business investment fell for a second straight month.

Last month, Japanese lawmakers passed Prime Minister Naoto Kan’s $61 billion stimulus package that aims to create jobs and inject some life into the economy. The embattled leader has struggled to keep the focus on the economy in a venomous political environment. His approval ratings have declined in recent voter polls.