Japan second-quarter GDP beats expectations, expands 0.8% from previous quarter

Japan's second-quarter gross domestic product beat analysts' expectations on Thursday, both on a quarter-on-quarter as well as an annualized basis.

GDP rose 0.8% quarter on quarter compared to Reuters poll estimates of a 0.5% rise. This was also a reversal from the revised 0.6% fall seen in the first quarter.

It expanded 3.1% on an annualized basis, also beating estimates of a 2.1% growth.

On a year-on-year basis, however, the country's GDP fell for a second straight quarter, down 0.8% after have declined 0.9% in the first quarter.

Following the GDP data release, the benchmark Nikkei 225 rose 0.16%, while the broad-based Topix climbed 0.44%.

The Japanese yen strengthened marginally against the U.S. dollar, trading at 147.18.

Speaking to CNBC's "Squawk Box Asia," Jun Saito, senior research fellow at the Japan Center for Economic Research, described the GDP result as "very positive," and will encourage the Bank of Japan to continue raising interest rates.

However, Saito said that the Japanese economy will only grow "modestly" for the whole of 2024, due to the contraction seen in the first quarter of the year.

With a narrowing interest rate differential between Japan and the U.S. — where Japan raises rates and the U.S. cuts rates — the yen is likely to strengthen against the dollar which will affect the country's export value, Saito added.

"Taking that into account, I think the growth perspective of Japanese economy is not that great, because of the negative influence coming from exports, while the domestic [growth] is not that strong," he said.

Saito, who expects the BOJ to monitor the market reaction as it proceeds with monetary tightening, highlighted that the bank is focused on normalizing its monetary policy to be "more