The world's second largest economy contracted at an annualised rate of 3% in the April to June quarter, as both domestic demand and exports weakened.

It was the first decline in more than a year, and the biggest since the third quarter of 2001.

The government has called on firms to raises wages to help boost spending.

The Japanese economy, like most around the world, has also been affected by higher energy and food prices.

"It is desirable that income for employed people increases," said Economy and Fiscal Policy Minister Kaoru Yosano.

"We want company managers to recognise that pay rises would compensate for price rises."

Last month the Japanese government announced an economic stimulus package worth 11.7 trillion yen ($107bn; £61bn).

A country is generally considered to be in recession when it sees two consecutive quarters of declining economic output.

BBC