Japan's economy slid back into recession in July-September as uncertainty over the overseas outlook hurt business investment, putting policymakers under growing pressure to deploy new stimulus measures to support a fragile recovery.
Many analysts expect the economy to grow only moderately in the current quarter as companies remain hesitant to use their record profits for wage hikes, underscoring the challenges premier Shinzo Abe faces in pulling Japan sustainably out of stagnation with his "Abenomics" stimulus policies.
The world's third-largest economy shrank an annualised 0.8 percent in July-September, more than a median market forecast for a 0.2 percent contraction, government data showed on Monday.
That followed a revised 0.7 percent contraction in April-June, which was the first decline in three quarters.
Japan thus slipped back into technical recession, which is defined as two consecutive quarters of contraction, after suffering one last year due to the hit on consumer spending from a sales tax hike in April 2014.
On a quarter-on-quarter basis, the economy shrank 0.2 percent in the third quarter, the Cabinet Office data showed.