Japan's economy expanded in April-June at half the pace expected, as domestic spending almost came to a grinding halt and export growth decelerated, increasing the chance for monetary and fiscal stimulus.

Gross Domestic Product (GDP) grew at an annualized pace of 1.4% in the three months through June, a Cabinet Office report showed in Tokyo today.

That was less than the median estimate of 2.3% and down from 5.5% growth clocked in the previous quarter.

Unadjusted for prices, Japan's second-quarter GDP contracted at a 0.6% annual pace.

Consumption rose the least since the March 2011 earthquake, signaling loss of momentum from government incentives that have supported domestic demand.

Today’s report adds pressure on policy makers to prevent a steeper slowdown in the world’s third-largest economy.

The Bank of Japan refrained from easing policy at a board meeting last week.

The GDP deflator, a measure of price trends across the Japanese economy, contracted 1.1% from the same quarter a year earlier, today’s GDP report showed.

Japan's GDP grew 0.3% in the April-June period over the previous quarter.

Consumer spending rose 0.1% in the April to June period quarter-on-quarter, slower than a 1.2% gain in the previous three months.

Net exports, or exports less imports, cut 0.1% from GDP.