ArrowArtboardCreated with Sketch.Title ChevronTitle ChevronIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailPositive ArrowIcon Print

Japan closes output gap, but prices fail to budge

Supply drops below stagnant demand as weak pay growth dampens consumption

 (placeholder image)
Despite Japan's acute labor shortage, construction companies and others are finding ways to adapt without raising wages.   © Reuters

TOKYO -- Japanese demand has surpassed the nation's output capacity in two straight quarters for the first time in three years, yet the economy still lacks a spark as stubbornly low wages block the government's long-awaited virtuous cycle.

The difference between actual and potential gross domestic product -- in other words, total demand for goods and services versus total output capacity -- is known as the GDP gap, or output gap. Cabinet Office data released Wednesday shows a positive GDP gap of 0.1% for October-December 2016 and January-March of this year, signaling higher demand than supply.

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

Nikkei Asian Review, now known as Nikkei Asia, will be the voice of the Asian Century.

Celebrate our next chapter
Free access for everyone - Sep. 30

Find out more