Japan's economy grew a real 0.6 percent in the July-September period, logging a seventh straight quarterly expansion, backed by strong exports and corporate capital investment, the government said Friday.

But prices continued to fall for a 22nd straight quarter, the Cabinet Office said in a preliminary report.

The growth of the real gross domestic product -- the total value of all goods and services produced domestically -- translates into an annual 2.2 percent rise.

"The figures show that the economy as a whole was more resilient than we had expected," said Takahide Kiuchi, senior economist at Nomura Research Institute.

Even if the economy posts zero growth for the rest of the fiscal year, which ends March 31, the country would log 2.2 percent growth for the year, beating the government estimate of 2.1 percent, economic and fiscal policy minister Heizo Takenaka claimed.

"The figures prove our scenario that the economy is on a recovery track," he told a news conference.

But the GDP in nominal terms slid 0.02 percent quarter-on-quarter, or an annual 0.1 percent.

"This reconfirms that deflation is pretty much deep-rooted and stubborn." Takenaka said of the nominal growth rate.

The fact that economic growth in nominal terms remained below that of real economic growth for six straight quarters indicates deflation remains a serious problem.

The GDP deflator -- a measure of the overall inflation rate -- logged a 2.7 percent decline, down further from a 2.5 percent fall in the previous quarter. The price fall was partly attributed to the improved quality of information technology devices, including personal computers.

Real data on GDP are adjusted for price and seasonal factors. Nominal GDP is said to reflect economic conditions under deflation more accurately than real GDP.

The deflator has been stuck in negative territory for more than five years.

"The announcement of GDP was what made us realize again the gap between the real-term and nominal figures," said Yasunari Ueno, chief market economist at Mizuho Securities Co Ltd. "The economy is still far from getting out of deflation."

Economists agree that exports continued to play a key role in supporting the nation's nascent economic recovery.

Net exports -- exports minus imports -- contributed 0.2 percentage point to the real GDP growth as exports to China picked up after the impact of the severe acute respiratory syndrome epidemic abated. The U.S. economic recovery also helped Japan's exports.

Exports rose 2.8 percent for the fourth straight quarterly rise, while imports increased 1.7 percent after a 1.2 percent contraction in the previous term.

Business investment grew 2.8 percent in real terms, staging a fifth consecutive quarterly growth.

Private housing investment rose 2.7 percent.