Output gap shows Japan still deep in deflation

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TOKYO, March 15 (BestGrowthStock) – Japan’s output gap, a gauge of
price pressures, was deeper in negative territory than initially
reported in the fourth quarter of 2009, the government said,
showing that supply was outstripping demand and weighing on
prices.

The output gap stood at minus 6.4 percent for the final
quarter of last year, against a preliminary reading of minus 6.1
percent and nudging towards the record minus 8.0 percent seen in
the first quarter of 2009 amid the financial crisis.

It was the seventh straight quarter of negative readings.

The output gap measures how much gross domestic product
deviates from potential GDP, or the volume of activity when the
economy is running at full capacity.

A negative reading means supply capacity is ahead of demand,
leading to deflationary pressure.

Demand fell short of supply capacity by an annualised 30
trillion yen ($331 billion) in nominal terms because of the
lingering effects of a plunge in demand caused by the financial
crisis, the Cabinet Office said.

Investment

($1=90.54 Yen)
(Reporting by Tetsushi Kajimoto)

Output gap shows Japan still deep in deflation