The third largest economy came out of recession in the last quarter of 2014, however, the growth is still seen vulnerable.
Japan's weaker than expected growth comes despite a series of stimulus measures by the government. Markets, however, reacted positively to the news.
The economy expanded by an annualised 2.2% in the last quarter in a preliminary reading, compared to forecasts for a 3.7% increase.
Japan's growth in the three months to December comes after the economy shrank for the two previous quarters. The country has been recovering from a sales tax hike, which dampened spending.
The economy grew 0.6% in the period from the previous quarter, but that also fell below forecasts of 0.9% growth.
The released data indicated the recovery was still fragile in the country where consumer sentiment remains soft even after Prime Minister Shinzo Abe delayed a second increase to the sales tax that was scheduled for October this year.
Private consumption, which accounts for about 60% of the economy, increased 0.3% in the fourth quarter, less than the 0.7% rise expected by economists.
Senior economist at Moody's Analytics Glenn Levine said exports "added solidly" to economic growth, accounting for about half of the expansion, while the rest of the economy remained relatively subdued. Exports rose 2.7% in the fourth quarter compared to the third quarter, while imports were up 1.3%.
The weakest component of the gross domestic product (GDP) figures was the "paltry" increase in business investment.
"Japan's corporate sector is enjoying record profit levels and sits atop a mountain of cash, with export-facing firms, in particular, benefiting from better export sales linked to the cheaper yen," Mr Levine said. "Yet, so far firms have been reluctant to deploy any of this cash and invest in additional capacity."
This "issue of confidence" indicates that firms do not believe that the domestic economy is improving, which is a reflection of whether Prime Minister Abe's economic policies termed "Abenomics" are succeeding, he said.
The country's weaker than expected growth comes despite a series of stimulus measures by the government.
In December, the government approved a $29bn (£18.8bn) stimulus package to help businesses and consumers just two weeks after a victory by the prime minister in a snap election.
Market sentiment was positive, however, with the benchmark Nikkei 225 hitting a nearly eight-year high of 18,047.07 in early trade, marking its highest level since July 2007.
