* Revised Q3 GDP beats initial estimates, forecasts
* Capex, consumption also revised up
* Sales tax hike slump, trade risks cloud outlook (Adds graphic in paragraph 11)
By Daniel Leussink
TOKYO, Dec 9 (Reuters) - Japan's economy expanded at a much faster pace than initially reported in the third quarter, as resilient domestic demand and business spending offset the hit to growth from falling exports and global trade tensions.
Gross domestic product grew an annualised 1.8% in July-September, stronger than the preliminary reading of 0.2% annualised growth, Cabinet Office data showed Monday.
The firmer growth marked the fourth consecutive quarter of expansion and also beat economists' median forecast for a 0.7% gain. It was mostly driven by improvements in capital expenditure and private consumption.
However, analysts say the third quarter strength, which was the weakest growth seen this year, masks some fragility that could to lead to a much weaker performance going forward.
"While Japan's economy expanded more rapidly ahead of October's sales tax hike than initially estimated, output is set to shrink in 2020," said Marcel Thieliant, senior Japan economist at Capital Economics.
"The main reason for the upward revision was that non-residential investment jumped by 1.8% on-quarter instead of the preliminary estimate of 0.9%," he wrote in a note.
Behind the big headline increase was strong investment from non-manufacturers, such as retailers, said Takeshi Minami, chief economist at Norinchukin Research Institute.
"In contrast to that, spending by manufacturers wasn't so strong."
The jump in capital spending outpaced the median forecast for a 1.7% increase.
The annualised GDP growth translates into quarter-on-quarter expansion of 0.4% from April-June, compared with a stronger 0.5% gain in the second quarter and a preliminary reading of a 0.1% increase.
(For an interactive graphic on Japan's real GDP growth, click: https://tmsnrt.rs/2sU5tQZ)
The better-than-expected GDP revision comes after exports and factory output posted their largest declines in years in October, exposing widening cracks in an economy hurt by declining demand.
The Bank of Japan could offer a bleaker assessment on factory output than in October at its rate review this month, sources with direct knowledge of the matter said.
Private consumption, which accounts for some 60% of gross domestic product, rose 0.5% from the previous three months, slightly better than the preliminary reading for a 0.4% gain, the data showed.