BOJ releases quarterly estimates of output gap and potential growth

The Bank of Japan's Research and Statistics Department regularly publishes estimates for the 'output gap' and 'potential growth rate.'

The output gap serves as a crucial indicator for the level of economic activity and associated price pressures, while the potential growth rate reflects Japan's long-term economic growth capacity.

These figures are vital for assessing the nation's economic and price conditions.

However, it is important to note that these are not objective, directly observable data points but rather require estimation through specific methodologies.

The BOJ releases these updated estimates on its website on a quarterly basis, typically on the third business day of January, April, July, and October.

Users of the output gap and potential growth rate data must exercise caution, as the estimates can vary considerably depending on the chosen estimation methods and are inherently subject to estimation errors.

The Bank of Japan advises viewing the data 'with some latitude' due to these inherent uncertainties.

For a detailed understanding of the methodologies employed, the BOJ refers to its 2017 research paper, 'Methodology for Estimating Output Gap and Potential Growth Rate: An Update' by Kawamoto et al.

Furthermore, the Bank notes that the provided charts and data are subject to unscheduled changes, revisions, and terminations, and requires proper source attribution for any reproduction or copying.