Japan's Cabinet Office has released data that showed the country's economy contracting more than what the government initially estimated in the three months through June.

Japan's economy shrank an annualized 7.1 percent in the second quarter of this year from the previous quarter, the biggest since the first quarter of 2009, when the global financial crisis hit Japan.

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The Japanese government issued a preliminary reading of a 6.8 percent fall, the Cabinet Office said in Tokyo, while economists surveyed said the drop was near 7 percent.

The government, however, revised the figure due to a bigger than expected decrease in capital expenditure and a deeper decline in consumer spending.

On a quarterly basis, Japan's economy shrank 1.8 percent in the April-June quarter mainly due to the sales-tax hike imposed in April, which kept consumers from spending.

Prime Minister Shinzo Abe earlier announced plans to increase the sales tax to 10 percent in October next year but economists said Abe might rethink his stance if the economy will continue to shrink in the July-August quarter.

Prior to the release of the economic figure, the Japanese government announced that it is ready to boost stimulus in order to boost spending and help weather the effect of a new sales tax increase.

Economists said that a further fall in the economy will heighten pressure on the Bank of Japan to expand its monetary stimulus, which is already considered massive, deployed in April 2013.

The central bank, however, remains unmoved so far by the soft data, arguing that the tax hike-pain is temporary with household spending set to pick up as a tightening job market pushes up wages.

The Cabinet Office also announced that Japan's capital investment fell 5.1 percent from the previous quarter, more than double the initial estimate for a 2.5 percent drop. Private consumption was revised to a 5.1 percent decline from an initial reading of a 5 percent fall. 

TagsJapan Economy, Japan GDP