Japan Q2 Output Gap Narrows To -1.8% From -2.0% In Q1

TOKYO (MNI) – Japan’s output gap, indicating the degree of
oversupply and slack demand, narrowed to -1.8%, or about Y10 trillion,
in the April-June quarter, showing a slight improvement from a reading
of -2.0% in the January-March period, the Cabinet Office said on
Wednesday.

The latest figure showed the smallest output gap since -0.8% marked
in Q3 2008.

The negative output gap narrows when gross domestic product rises
above the economy’s potential growth rate, estimated by the Bank of
Japan to be around 0.5%.

Japan’s economy expanded a real 1.4% at an annualized rate in the
second quarter of 2012, posting gains for four quarters in a row, after
+5.5% in Q1 and +0.3% in Q4 2011.

The output gap is believed to influence consumer prices with a lag
of six to 12 months.

Japan’s output gap has been improving gradually after hitting the
recent bottom of -7.9% in Q1 2009 at the height of the global financial
crisis.

tokyo@marketnews.com
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