TOKYO (Reuters) - Japan’s economy unexpectedly shrank an annualised 1.6 percent in July-September after a severe contraction in the previous quarter, likely solidifying the view that premier Shinzo Abe will delay a second sales tax hike next year.
The preliminary figure for gross domestic product (GDP) compared with a 2.1 percent increase forecast by economists in a Reuters poll. It followed a revised 7.3 percent contraction in the second quarter, which was the biggest slump since the March 2011 earthquake and tsunami, Cabinet Office data showed on Monday.
On a quarter-on-quarter basis, the economy shrank 0.4 percent in the third quarter.
Private consumption, which accounts for about 60 percent of the economy, rose 0.4 percent from the previous quarter, a sign that an increase in Japan’s sales tax to 8 percent from 5 percent in April continued to take a toll. That compared with a median market forecast for a 0.8 percent increase.
Reporting by Leika Kihara and Tetsushi Kajimoto; Additional reporting by Chris Gallagher