Japan's economy shrank by 3.5 percent in the third quarter on an annualized basis, marking the biggest contraction since early 2011, the government said Monday.

The country's gross domestic product declined by 0.9 percent relative to the previous quarter, the Cabinet Office said.

The third-quarter contraction was the biggest since the 8 percent drop in the first quarter of 2011, when a devastating earthquake and tsunami had a chilling effect on the country's economy.

Capital expenditure fell 3.2 percent in the third quarter, while consumer spending slipped by 0.5 percent, according to the government's preliminary report.

Japan's exporters also were hard hit in the quarter by the global economic slowdown and the strengthening of the yen against the U.S. dollar and the euro. EFE