Japan's output gap negative for 16th straight quarter

Bank of Japan officials say a key economic indicator shows demand continued to lag supply in the January-to-March quarter.

Officials say the "output gap" for the 3-month period was minus 0.66, extending the run of negative quarterly results to four years.

The gap measures the difference between the economy's actual and potential output. A negative figure suggests weak demand, which puts downward pressure on prices.

The BOJ initially announced a positive outcome for the October-to-December quarter last year, but then revised the number into negative territory.
The latest figure is likely a result of weakening demand for capital investment, which comes after some automakers halted production over a testing scandal.

A positive output gap is seen as a sign of demand-driven inflation. It's usually considered a prerequisite by the central bank to raising rates.