From Japan’s Cabinet Office on Monday:
- The demand-supply gap, a yardstick that quantifies the difference between the economy’s overall demand and potential supply of all goods, stood at minus 1.5% for the October-December quarter of 2013 (a negative gap between demand and supply suggests weak demand coupled with excessive supply capacity)
- It shrunk by 0.1% from July-September and marking a fourth consecutive quarterly improvement
- The Cabinet Office estimates Japan’s potential growth rate at 0.7% or thereabouts, while they say Japan’s real economy grew at an annualized 1.0% in the last quarter of 2013, thereby narrowing the demand-supply gap
It is still slow going, though:
- The pace of demand-supply narrowing has slowed in the last four quarters
- Consensus among market economists is that the gap won’t turn positive until fiscal 2015 at the earliest
