August 13, 2014 / 12:01 AM / 3 years ago

RPT-Japan economy shrinks annualised 6.8 pct in April-June

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TOKYO, Aug 13 (Reuters) - Japan’s economy shrank an annualised 6.8 percent in the April-June quarter to suffer its biggest contraction since the March 2011 devastating earthquake and tsunami, government data showed on Wednesday, as a sales tax hike took a bigger-than-expected toll on household spending.

The preliminary figure for gross domestic product (GDP) compared with a 7.1 percent decline forecast by economists in a Reuters poll. It followed a revised 6.1 percent rise in the first quarter of this year, the Cabinet Office data showed.

On a quarter-on-quarter basis, the economy contracted 1.7 percent in the second quarter after a revised 1.5 percent increase in the first quarter.

Private consumption, which accounts for about 60 percent of the economy, decreased 5.0 percent from the previous quarter, as households withheld spending after an increase in Japan’s sales tax to 8 percent from 5 percent in April.

External demand added 1.1 percentage point to the economy in the second quarter, the data showed.

Reporting by Leika Kihara and Tetsushi Kajimoto; Editing by Chris Gallagher

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