The latest reports show that Japan contracted more than expected in the fourth quarter of 2011, as a rising yen and Thai floods hurt its businesses.

The world’s third largest economy, Japan’s GDP (gross domestic product), shrank by 2.3 percent during the last three months of the 2011, which is much worse than expected from analyst’s forecast.

The Japanese Cabinet Office said on Monday that the economy shrank by 0.6 percent, quarter on quarter, and 0.9 percent throughout 2011.

These unpredicted bad figures of the economy are a big blow to country’s efforts to recover from the earthquake and tsunami earlier last year.

Economists said that the worst economic data comes amid concerns of a slowdown in the international economy, not least due to the continuing and constant debt crisis in the euro region.

The sovereign debt crisis of the euro-zone has spoiled the confidence and dented the consumer demand in Europe, which is a major Japanese goods market. While the U.S. high rate of unemployment continues to be a concern, despite encouraging economic data in recent weeks.

In January, Japan reported its first trade deficit since 1980, which showed broader changes in its economy as manufacturers shift production abroad to escape the strong Japanese currency yen, and be closer to their markets, but last year’s Thai flooding that underlined basing production abroad, also has risks.

The latest data showed that domestic private consumption, that accounts for over half the Japanese economy, edged up 0.3 percent in last quarter compared to the third quarter. The data showed that the corporate capital investment increased 1.9 percent, whereas the private housing investment dropped to 0.8 percent and public investment dropped 2.5 percent.

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