Japan’s gross domestic product beat analysts’ expectations to rise 3% in the last quarter of 2020 versus the previous quarter, boosted by private consumption, a jump in exports, and an influx of private investment. Compared with the previous year, fourth-quarter GDP dropped 1.2%.

The fourth-quarter results mean the world’s third-largest economy shrunk 4.8% in 2020 versus 2019, outperforming the 5.3% drop projected by the International Monetary Fund (IMF), the Organization for Economic Cooperation and Development (OECD), and the World Bank.

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Business investment rose 4.5% quarter-on-quarter after two consecutive periods of declines, while private consumption, which accounts for more than half of Japan’s economy, grew 2.2%. Between July and December, the government offered domestic tourism subsidies that boosted regional economies, but probably also contributed to the spread of COVID-19.

Government income support—like cash handouts and financial subsidies for small businesses—and discounts for travel and eating out helped boost consumer spending through the third and fourth quarters, said Stefan Angrick, the senior economist in Japan for Oxford Economics, who authored the Monday report.

Shipments of electronic parts and cars to China, and increased exports to the U.S. and Europe, pushed exports up 11.1% from the previous quarter.

“We expect [the export rebound] to continue as demand from China remains strong, and U.S. demand should accelerate further in 2021, buoyed by President [Joe] Biden’s fiscal plans,” Angrick said.

China is Japan’s largest trading partner, and China’s relatively successful economic recovery—its GDP grew 2.3% in 2020—has helped Japan’s exports tick back up as China’s demand for imports returns to pre-pandemic levels. In March, when lockdowns swept China and cratered demand, Japan’s overall exports slumped the most in almost four years, with exports to China dropping 8.7% through March compared with the prior year.

After Japan published the better-than-expected fourth-quarter GDP results on Monday, the Nikkei 225, Japan’s leading stock index, hit its highest levels in more than 30 years. On Tuesday afternoon, the Nikkei was up more than 1% compared with the day before.

The fourth-quarter numbers, however, don’t account for Japan’s spike in coronavirus cases at the end of 2020, which led the government to declare a state of emergency at the start of this year.

The emergency declarations, which asked restaurants and bars to shut early and urged companies to employ work-from-home schemes, will temporarily slow Japan’s recovery in the first quarter of 2021, according to a Monday report by Oxford Economics. But Japan’s COVID-19 vaccine rollout, slated to begin this week, will help the economy rebound in the second quarter, the report said.

Economic momentum “started to wane in December amid a pickup in COVID-19 cases,” the report said. But stronger export demand and government policy support—in addition to the vaccine rollout, which should enable businesses to reopen—will boost activity and spending in the second quarter of the year.

The spike in COVID-19 cases at the end of last year caused service sector consumption to dip in December, leading to a 0.4% contraction in GDP that month from November, the Japan Center for Economic Research said Tuesday, according to Nikkei Asia.

Japan is banking on a nationwide reopening in order to host the Tokyo Olympic Games in July. The government postponed the games last year and has vowed that they will occur this summer, despite recent polls indicating that around 61% of the Japanese public and over half of 11,000 surveyed companies in Japan want the government to either postpone or cancel the Olympics.