Japan’s economy shrank at an annualised pace of 6.8 per cent during April-June, after a controversial sales tax increase, the Government said on Wednesday.

Consumer spending, which accounts for about 60 per cent of the gross domestic product, plunged 5.0 per cent quarter-on-quarter after Tokyo raised the nation’s sales tax in April — the first hike in 17 years.

The fall in Japan’s gross domestic product — the first contraction in two quarters — was slightly better than the 7.2-per-cent annualised contraction predicted in a poll of economists by the Nikkei business daily.

Corporate investment fell 2.5 per cent in the quarter compared with a 7.7 per cent surge in January-March, the Cabinet Office said.

Exports declined 0.4 per cent, down from a 6.5 per cent increase in the previous quarter.

On Friday, the Bank of Japan had downgraded its view on exports, saying the nation’s “exports have shown some weakness’’.

Meanwhile, annualised growth during January-March was revised downward to 6.1 per cent from the 6.7 per cent estimated in June, the office said.

The office also revised down the gross domestic product in the October-December quarter to a 0.2 per cent contraction from the 0.3 per cent growth.

Economic Revitalization Minister Akira Amari maintained his overall economic assessment, saying the economy “has continued to recover moderately’’.

The minister also said the negative impact of tax hike, which was increased to 8 per cent from 5 per cent, is “gradually decreasing’’. But government reports showed workers’ wages were down even before the tax hike.

The income of Japanese workers’ households dropped 6.6 per cent in June for the ninth consecutive month of fall, the recent report said.

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