Japan's industrial output has expanded in December, a sign that the lagging economy is on the path of recovery helped by improvement in the global economy and weakening of the yen.

Industrial output rose 2.5 percent in December as against the 1.4 percent decline recorded in November, according to a data released by Japan's Ministry of Economy, Trade and Industry (METI). Most analysts expected a 4.5 percent gain.

According to the METI data, inventories declined 1.1 percent from the previous month while shipments rose 4.4 percent.

Semiconductor industry and transport component manufacturers were the major growth drivers which recorded a gain of 60 percent and 6.9 percent respectively. The positive figures have also prompted the ministry to raise its assessment of the industrial output and said there were visible signs of a bottoming out.

"Positive effects from a weak yen and the government's economic measure are expected to appear," said a statement from the Ministry.

A survey of the manufacturers released along with the data showed that they expected a moderate recovery in production in the coming months with 2.6 percent gain in January followed by a 2.3 percent rise in February.

Meanwhile, Japan's GDP in the final three months through December is expected to decline echoing the contraction recorded in the second and third quarters of last year as exports have fallen for the past seven consecutive months and domestic demand remains weak.

But growth is forecasted to return in the first quarter of 2013 with the 10.3tn yen ($113 billion) stimulus package announced by the Prime Minister Shinzo Abe. The government is expecting to achieve a growth rate of 2.5 percent in the coming fiscal year.