Japan's economy shrank by an annualized real 0.7 percent in the October-December quarter, slightly higher than the initially reported 2.3 percent fall due to a stronger recovery in capital investment, the government said Thursday.

The data confirmed that the Japanese economy contracted in four of the last five quarters as exports declined amid the strong yen, the European sovereign debt crisis and flooding in Thailand. The contraction was relieved by solid domestic demand.

The Cabinet Office said the annualized fall in GDP corresponds to a 0.2 percent drop from the previous quarter through September, revised up from a 0.6 percent decline reported a month ago.

For the whole of 2011, the economy shrank 0.7 percent from 2010, milder than the preliminary reported 0.9 percent contraction.