Japan’s economy shrank more sharply than expected in the second quarter, with revised gross domestic product data released on Monday showing an annualised contraction of 1.2 per cent.

Economists were expecting a downward revision following evidence last week that capital spending, a big driver of growth, had slowed sharply. But the fall of 0.3 per cent in quarter-on-quarter terms against a preliminary estimate of 0.1 per cent growth was deeper than expected. On average, economists had expected an annual contraction of 0.7 per cent.