Meanwhile, a change toward this positive territory implies upward pressure on prices, and a change toward negative territory implies downward pressure on prices. In Japan, the rate of real GDP growth has exceeded that of potential growth since fiscal 2013, thereby contributing to a significant improvement in the output gap. Now, let us take a look at some indicators related to the output gap.
Chart 4 exhibits (1) the estimates of the output gap by the Bank and (2) the composite indicator in the Bank’s quarterly Tankan (Short-Term Economic Survey of Enterprises in Japan). The Bank’s estimate reports an improvement from about minus 1 percent in July–September 2013 to nearly 0 percent in October-December 2013, suggesting that the output gap is more or less balanced.