Japan's economy contracted 1.9% in annual terms in the July-September period, according to revised data released Monday that confirmed a recession in the world's third-largest economy ahead of an election next weekend.
Data for both business and public spending were worse than anticipated. Most economists had forecast an upward revision of earlier figures showing a 1.6% contraction.
On a quarterly basis, the economy shrank 0.5%. The earlier estimate was that it had fallen 0.4%. In the April-June quarter, the economy contracted 7.3%.
A sales tax hike to 8% from 5% on April 1 is seen as the main reason why the economy has faltered after recovering from the last recession in late 2012. Late last month, Prime Minister Shinzo Abe postponed a planned increase in the tax to 10% that was due to take place in 2015. It was put off until April 2017.
Abe also dissolved parliament and called a snap election, saying he wanted to win a public mandate for the tax decision and other policies. He has promised to step down if his Liberal Democratic Party failed to keep its parliamentary majority, but given the lack of a strong opposition, polls suggest that is highly unlikely.
The hope is that expectations of higher prices will lead consumers and businesses to spend more, helping to sustain growth. Abe's government has also promised major reforms to help improve Japan's competitiveness. But so far those reforms have made little headway.
