Japan's gross domestic product added just 0.3 percent in the second quarter of 2012 compared to the previous three months, the Cabinet Office said on Monday in a preliminary reading - suggesting that the recovery from the March 2011 earthquake and tsunami remains stuck in neutral.

The headline figure missed forecasts for an increase of 0.6 percent following the 1.6 percent gain in the first quarter.

On a yearly basis, GDP added 1.4 percent - also shy of expectations for a jump of 2.5 percent following the 4.7 percent gain in the previous three months.

In a statement accompanying the release of the data, Economics Minister Motohisa Furukawa pointed out that the Japanese economy is growing and is expected to continue to do so in Q3 and beyond.

"Japan's economy continues in an uptrend led by domestic demand," he said.

Furukawa acknowledged the slowdown, citing the persistent debt woes in Europe as the chief culprit.

Nominal GDP fell 0.1 percent on quarter, missing forecasts for a gain of 0.4 percent after collecting 1.2 percent in the three months prior.

The GDP deflator dropped an annual 1.1 percent versus forecasts for a contraction of 0.8 percent, but up from the -1.3 percent showing in the first quarter.

Private consumption was up just 0.1 percent on quarter, missing forecasts for an increase of 0.3 percent.

External demand eased 0.1 percentage point from GDP, while domestic demand added 0.4 point, the data showed.

RTTNews