BY TAKASHI NAKAMICHI

TOKYO—Japanese economic growth slowed more sharply than expected in the April-June quarter as exports and consumer spending lost steam, raising the specter of further deceleration for the rest of this year.

Japan had stellar growth in the first quarter on stepped-up government spending on rebuilding in areas battered by the March 2011 earthquake and incentives to boost sales of fuel-efficient vehicles.

But fiscal policy appears no longer enough to offset the growing impact of Europe's persistent debt crisis and the resulting global slowdown on Japan's export-reliant economy.

"Support from fiscal policy is expected to gradually decrease from now on," said ...