Japan said Wednesday its gross domestic product shrank 6.8% in annualized terms in the April-June quarter, underscoring how sharply the world's third-largest economy reversed course after a rise in the sales tax to 8% from 5% on April 1.

While the headline figure wasn't quite as bad as economists had expected, it marked the sharpest decline since early 2011, when a major earthquake paralyzed Japan's supply chains. It also followed the previous quarter's 6.1% surge. The Japanese economy is widely expected to recover over the...