The Japanese economy contracted by 1.8 per cent in the second quarter of 2014 marking the worst quarterly decline since the 2011 earthquake.
Revised figures released today by Japan’s cabinet office fell below initial estimates which predicted a 1.7 per cent slide in the economy over the second quarter.
The first three months of 2014 saw the Japanese economy expand by 1.5 per cent. On an annualised basis GDP also shrunk by 7.1 per cent over the second quarter.
The recent slowdown is thought to have been largely driven by the increase in consumption tax from 5 per cent to 8 per cent back in April, which had initially triggered a short-term surge in spending and boost to economic growth ahead of the tax hike.
Capital Economics Japan Economist Marcel Thieliant warns that the recovery in Japan’s economic could be levelling off before it has really started.
He says: “The renewed dip in current conditions suggests that the recovery is already losing momentum before it has even started in earnest.
“Today’s data add to other disappointing survey evidence which indicate that the recovery from the sales tax hike remains sluggish.”