Japan’s economy grew at an annualized rate of 2.1% in the first quarter, surpassing expectations, though analysts warned that the fallout of the Iran war could hamper future expansion.

The strong results were driven by rising US-bound exports and sturdy domestic consumption, the latter thanks to a temporary cash handout program, Nikkei reported. Yet analysts predicted that annualized growth will cool in the second quarter to less than 1% as the country — which received around 90% of its oil imports from the Middle East before the start of the war — grapples with fuel shortages.

Higher prices and slowing growth have sparked fears of stagflation in the world’s fourth-largest economy.