MNI BRIEF: Japan's Q2 Output Gap Hits 17th Negative Quarter
MNI (TOKYO) - The Bank of Japan has estimated the economy's output gap at -0.55% in Q2, its 17th straight quarter in negative territory following Q1's -0.72%, indicating upward pressure on prices continues with a time lag, data released by the BOJ showed on Thursday.
The BOJ's estimate of the output gap, based on capital and labour stocks, is smaller than the Cabinet Office's last estimate of -0.6% in Q2 (vs. -1.2% in Q1), which is only based on revised second preliminary Q2 GDP data showing a 0.7% rise q/q, or an annualised rate of 2.9%.
The BOJ’s Outlook Report in July said that the output gap, which captures the utilisation of labour and capital, has followed an improving trend, albeit with fluctuations. The output gap is likely to widen moderately within positive territory toward the end of the projection period, the report noted.
The BOJ also said that Japan's potential growth rate for the April-June period was estimated at 0.64%, up from 0.61% for the October 2023-March 2024 period.
The Cabinet Office estimated Japan's potential growth rate to be about +0.6% in the April-June period, unchanged from +0.6% for the first quarter.