TOKYO (MNI) – Japan’s negative output gap — excess capacity vs.
slack demand — stood at -3.9%, or around Y20 trillion, in the
January-March quarter, unchanged from the previous three months, the
Cabinet Office said on Monday.
The negative output gap widens when gross domestic product growth
falls below the economy’s potential growth rate.
But the Q1 gap was unchanged because the March 11 disaster not only
caused the Q1 GDP to post a sharp contraction but also lowered the
potential growth rate by wrecking production facilities and supply
chains.
Real GDP shrank by an annualized 3.7% in Q1, when the potential
growth rate also slumped by an annualized 3.9%, according to the Cabinet
Office.
The output gap is believed to influence prices with a lag of about
12 months.
Japan’s output gap has been improving gradually after hitting a
bottom of a revised -8.8% in January-March 2009.
Core CPI, which excludes perishables, rose 0.6% from a year earlier
in April, marking the first y/y rise in more than two years. It posted a
record 2.3% drop y/y in July-September 2009.
tokyo@marketnews.com
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