Japan's economy shrinks more than initial estimates

Japan's economy contracted by 7.1% in the three months to June, more than initial estimates, and revised from 6.8% reported in August.

Most forecasts were for the economy to shrink by about 7%.

The contraction during the second quarter has been widely attributed to a hike in the nation's sales tax, which rose from 5% to 8% in April.

The official gross domestic product (GDP) figure of 7.1% is an annualised number.

In quarterly terms, Japan's economy, which is the world's third-largest, shrank by 1.8% in the three months to June compared to the quarter ending in March when it grew by 1.5%.

 'Cautious decision'

Private consumption makes up some

Japan's economy signals stagnation and weakness

Japan's economy has shown signs of stagnation and some weakness as households spent less and factory output stayed flat in July.

Official data released on Friday also showed consumer inflation stayed unmoved at 3.3% from the month before.

Japan raised its sales tax from 5% to 8% in April so analysts said "real" inflation for July was actually 1.3%.

Japan's economy, which is the world's third-largest, suffered from deflation for almost two decades.

The central bank's current target for the inflation rate is 2%.

Sales tax

Since coming to power in 2012, Japan's Prime Minister Shinzo Abe has seen his various reforms aimed at reviving the economy provide some relief to the country's deflation concerns.

Mr Abe's reforms, dubbed 'Abenomics', have been aimed at boosting inflation, among other targets, in the hope that consumers would spend instead of save.

An employee of Toyota Motor's subsidiary Toyota Motor Kyushu at the Kanda Plant in

Japan's economy shrinks after sales tax rise

Japan's economy contracted by an annualised 6.8% in the second quarter of the year, the biggest fall since 2011 when it was devastated by an earthquake and tsunami.

The official gross domestic product (GDP) figure though was smaller than the 7.1% drop economists expected.

The shrinkage was largely in response to a government sales tax, which held back consumer spending.

Japan's sales tax rose from 5% to 8% in April.

On a quarterly basis, the economy contracted 1.7%