Japan's economy shrinks April-June as tax raise slams private spending amid revival efforts

TOKYO – The Japanese economy shrank during the second quarter, at an annual pace of 6.8 percent, according to government data, as spending got slammed by a tax raise that kicked in from April.

Japan's gross domestic product, or the total output of goods and services, contracted 1.7 percent during the April-June period from the previous quarter.

The results released Wednesday had been expected because the consumption-tax raise has weighed on spending. The question now is how long this holding off on spending may last.

Buyers of major purchases, such as cars, rushed to beat the tax jump, somewhat inflating spending in earlier months.

The government has been trying to revive the world's third-biggest economy by freeing up regulations and encouraging the yen to rise, a move that helps exporters.