Japan's economy has contracted much faster than expected in the third quarter as global supply disruptions hit exports and business spending plans and fresh Covid-19 cases sour the consumer mood, Reuters reports.

While many analysts expect the world's third-largest economy to rebound in the current quarter as virus curbs ease, worsening global production bottlenecks pose increasing risks to export-reliant Japan.

"The contraction was far bigger than expected due to supply-chain constraints, which hit car output and capital spending hard," said Takeshi Minami, chief economist at Norinchukin Research Institute.

"We expect the economy to stage a rebound this quarter but the pace of recovery will be slow as consumption did not get off to a good start even after Covid-19 curbs were eased late in September."