TOKYO // Japan's economy broke free of recession in the second quarter, the government said today, expanding 3.7 per cent at an annual pace on a strong rebound in exports and joining Germany, France and other economies in recovering from the global financial crisis. The recovery in the April-June quarter was driven by robust demand for exports such as video recorders and other electronics goods, said Kingo Toyoda of the Cabinet Office. Shipments to China and other emerging markets were particularly strong. Exports grew 6.3 percent from the previous quarter, the highest growth since the second quarter of 2002. Government stimulus measures have also helped, such as cash handouts and incentives to buy ecological products - although economists warned that the impact of such measures may peter out. Despite the increase in exports, economists said the nascent recovery could quickly run out of steam because domestic demand remains weak. Salaries are falling and the unemployment rate has risen to a six-year high of 5.4 percent as companies such as Toyota Motor Corp and Sony Corp have cut thousands of jobs. During the quarter through June 30, compensation for employees dipped 1.7 per cent, the data showed, while consumer spending edged up a tepid 0.8 per cent. The rebound in the world's second-largest economy came after a steep, yearlong contraction in gross domestic product, including a worst-ever drop in the final quarter of 2008, when the economy shrank at a 13.1 per cent pace.