Gross domestic product rose an annualised 1.2% in the three months to September, the Cabinet Office's revised data showed on Monday, higher than economists' median forecast and the initial estimate of 0.9% growth.

The revised numbers translate into a quarter-on-quarter expansion of 0.3% in price-adjusted terms, compared with a 0.2% growth issued on Nov. 15.

While the pickup in domestic demand will be welcomed by policymakers, the Bank of Japan's view that the economy is recovering could be challenged by uncertainty over U.S. President-elect Donald Trump's proposed tariffs.

Some economists have cast doubt over the feasibility of increasing borrowing costs as the economy is yet to show signs of a sure-footed recovery, as seen in recent sluggish household spending data.

However, others expect the BOJ could still tweak rates as early as this month, citing precedents for doing so in March and July despite weak consumption data.

The capital expenditure component of GDP, a barometer of private demand-led strength, fell 0.1% in the third quarter, revised up from a 0.2% decline in the initial estimate. Economists had estimated a 0.1% rise.

However, private consumption, which accounts for more than half of the Japanese economy, increased 0.7%, down from the preliminary reading of 0.9% growth.

External demand, or exports minus imports, knocked 0.2 percentage point off, compared with a 0.4 percentage point drop in the preliminary reading. On the other hand, domestic demand contributed 0.5 percentage points to growth.

(This story has been refiled to remove an extraneous word in headline)