The Japanese economy shrank at its fastest rate since the 2011 earthquake and tsunami in the second quarter of this year, contracting at an annual rate of 6.8%.

Government figures showed the economy declined by 1.7% in the three months to June compared with the previous quarter, after spending was hit by a sales tax rise in April.

In the first quarter of 2011 when the north-east of the country was hit by the disastrous tsunami, the economy shrank at an annual rate of 6.9%.

The second quarter's weak figures were expected as consumers and businesses had front-loaded spending in the first quarter to beat the 1 April increase in sales tax, resulting in an annual growth of 6.1%. Economists expect spending to pick up again in coming months.

The weak figures may force Tokyo to reassess another planned tax increase next year – a move aimed at finding new revenue sources to shrink the massive national debt.

The government, under Prime Minister Shinzo Abe and his "Abenomics" strategy, has been trying to pull the world's third biggest economy out of two decades of stagnation by expanding the money supply, freeing up regulations and encouraging the yen to fall, something that helps exporters such as Toyota and Canon.

But the government is also concerned about ballooning public debt and has raised the consumption tax to 8% from 5%.

Previous administrations have been nervous about raising taxes for fear of pushing the economy into a recession.

The Japanese economy has been eking out growth or at least staying flat in recent quarters, thanks partly to Abenomics.

Yasunari Ueno, chief market economist at Mizuho Securities in Tokyo, said the contraction was within his expectations, but the slowdown reflected not only the tax rise but also lower incomes and price increases from other sources.

"The impact from the tax is going to be short term," Ueno said. "But the economy is ailing, and that's not good."

Though public spending could prop up growth in the near term, it will be hard for any expansion to immediately and totally make up for the big drop for the latest quarter, he said.

Economics Minister Akira Amari said the government would be ready to compile an extra budget later this year should growth in the third quarter stay weak, although any fiscal stimulus would probably not be big enough to have a major impact on the economy, given Japan's dire government finances. "At the moment I don't feel the need (to prepare an extra stimulus) but we will take necessary steps as appropriate depending on economic developments from now on. Appropriate steps mean every possible measure," he told reporters after the data was published.

Dramatic wage increases are not likely in Japan, and the recent trend of rising prices is part of Abe's strategy to reverse Japan's debilitating spiral of deflation, or falling prices.

Others were more optimistic. "We believe real GDP will return to growth exceeding potential," in the next quarter, said Kyohei Morita and Yuichiro Nagai of Barclays, noting in a report that leading economic indicators have started to turn up already, such as public works and housing construction orders.