Japan's economy shrank more than initially thought in the third quarter, revised figures showed on Monday, exacerbating concerns about Prime Minister Shinzo Abe's effort to spur growth.
The economy shrank an annualized 1.9 percent in the July-September quarter, revised figures showed, worse than expectations for a 0.5 percent contraction in a Reuters poll and down from an initial 1.6 percent contraction recorded in November.
On a quarter-on-quarter basis, the economy contracted 0.5 percent, compared with an initial 0.4 percent contraction.
"The large drag from inventories last quarter overstated the weakness of the economy somewhat. In the meantime, the monthly data have been more encouraging," Marcel Thieliant, Japan economist at Capital Economics wrote in a note. "The upshot is that the economy likely returned to growth this quarter."
Meanwhile, quarter-on-quarter capex for the July-September period was revised to a 0.4 percent contraction from a preliminary contraction of 0.2 percent, below expectations for a 0.8 percent expansion in a Reuters poll. Private consumption remained unchanged at 0.4 percent.
"We were expecting capex to be revised up, it's very disappointing," Izumi Devalier, Japan economist at HSBC told CNBC.
"I'm more concerned about private consumption. If you look at all the high frequency data, it does look like capex is on a solid footing, led by a recovery in exports. What I'm more concerned about long-term is whether private consumption sufficiently picks up to support growth next year," she said.