Japan's economic contraction in the first quarter was not as bad as initially thought according to revised figures released by the government on Monday.

However, economists suggest the current quarter may have seen the world's third-largest economy shrink by record levels due to the effects of pandemic-linked business and social restrictions.

The economy shrank an annualized real 2.2 percent in the January-March period from the previous quarter, upwardly revised from the preliminary reported 3.4 percent contraction, the Cabinet Office said on Monday.

On a seasonally adjusted basis, the contraction in real gross domestic product, equates to a 0.6 percent decrease, the office's revised data showed.

Japan's economy shrank for a second straight quarter in the January-March period and entered a technical recession as a result of the adverse effects of the coronavirus pandemic, the government said.

The government's preliminary data released on May 18 showed the economy shrank by an annualized real 3.4 percent in the recording period from the previous quarter.

The decrease in the quarter corresponded to a 0.9 percent decline on a seasonally adjusted quarterly basis, the Cabinet Office said at the time.

From an initial decrease of 0.7 percent, private consumption, which accounts for more than half of Japan's economy, fell a revised 0.8 percent.

Public investment, meanwhile, was downwardly revised from falling 0.4 percent to dropping 0.6 percent, as public works projects in March decreased, the latest figures showed.

Exports of goods and services remained unchanged from the initial reading, declining 6 percent, as did a 4.9 percent drop in imports in the reporting quarter, the Cabinet Office said.

Nominal GDP, not adjusted for inflation, shrank an annualized 1.9 percent in the January-March quarter, upgraded from a 3.1 percent shrinkage, the latest figures showed.

Looking ahead, economists said Japan most likely declined in the April-June period, due to the downside effects of the government's stay-at-home requests and restrictions on businesses activities since a state of emergency was first declared in April.

Some economists said they expect Japan's GDP could contract by around 20 percent in annualized terms in the current quarter, which would mark the worst decline since record keeping began, with the contraction worse than a 17.8 percent decline in the first quarter of 2009 booked in the wake of the global financial crisis.

While the nationwide state of emergency has been lifted, Japan's economy will likely suffer a huge contraction in the current quarter because it will take quite a long time for business to return to pre-COVID levels, Takeshi Minami, chief economist at Norinchukin Research institute, was quoted as saying.

Growth may rebound in July-September driven by private consumption. But capital expenditure could slow by then. We need to be mindful of the risk that economic activity could slump again if Japan is hit by a second wave of infection rises, Minami said.

(CGTN)