Japan on Monday revised down its quarterly growth figures, reigniting fears that the world's third-largest economy was stumbling amid turmoil in Europe and a slowdown in Asia.
Analysts said gross domestic product figures were within market expectations, but warned that an export slump and widening trade deficit would hurt the faltering economy, which grew 0.2 percent between April and June.
Preliminary figures from the Cabinet office had earlier shown 0.3 percent GDP growth for the quarter.
"Japan's economic slowdown is visible now," said Hideki Matsumura, chief economist at Japan Research Institute.
"Exporters are facing a tough environment, while the auto sector is slowing at home due to the end of government incentives" for eco-friendly cars.
"I'm afraid that we are going to see more and more negative economic data from now on. It would be no surprise if Japan's GDP shrinks later this year."
On an annualised basis, the economy grew a revised 0.7 percent in the quarter, lower than a preliminary 1.4 percent rise, the data showed.
The government has taken a series of steps to spur growth, including the incentives for fuel-efficient vehicle purchases and measures to rebuild the northern region hit by last year's deadly earthquake and tsunami.
But Japan's economy has faced headwinds caused by Europe's debt crisis, which has slowed growth worldwide, while a high yen has made Japanese exports less competitive in overseas markets.
Last month, the government downgraded its views on consumer sentiment and machinery orders, while the Bank of Japan effectively cut its assessments on exports and factory production.
It is not unusual for there to be a gap between the government's preliminary and revised data for annualised GDP following adjustments in other figures.
Capital spending showed a 1.4 percent on-quarter increase, down from a preliminary 1.5 percent expansion.
Private consumption, which accounts for about 60 percent of Japan's GDP, was unchanged from an initial estimate of a 0.1 percent gain.
In another sign of slowing growth, Japan's current account surplus in July tumbled 40.6 percent from a year earlier as exports to Europe and China weakened, the finance ministry said.
The current account, the broadest measure of Japan's trade with the rest of the world, recorded a surplus of 625.4 billion yen ($8.0 billion), down from a year ago but ahead of a market forecast of 438.2 billion yen.
The current account measures trade in goods, services, tourism and investment and marks the difference between Japan's income from foreign sources against payments on foreign obligations.
Within the current account figures, Japan posted a trade deficit of 373.6 billion yen, reversing a year-earlier surplus as exports turned down 7.4 percent.
The export slump showed "the recovery in overseas economies, which was expected in the latter half of this year, is being delayed," RBS Securities chief Japan economist Junko Nishioka told Dow Jones Newswires.