Updates on the Output Gap and Potential Growth Rate, and Monitoring Labor Market Indicators

March 26, 2026
Research and Statistics Department
Bank of Japan

The Bank of Japan's Research and Statistics Department releases the "output gap" -- which serves as an indicator for aggregate supply and demand balance -- and the "potential growth rate" -- which reflects the growth capacity of Japan's economy from a longer-term perspective. In light of the revision of the GDP statistics to the 2020 base year and changes in economic structure in recent years, the estimation methods for these indicators were reviewed.

In order to assess economic and price developments, it remains critical to identify the aggregate supply and demand balance by using the estimates of the output gap. In recent years, however, developments in labor input and labor market tightness appear to exert increasingly significant influence on economic activity in labor-intensive sectors and price trends amid intensifying labor supply constraints.

In light of these developments, the Bank of Japan's Research and Statistics Department has begun the quarterly publication of labor market indicators. These are considered to be suitable for complementary monitoring of the output gap, given their relevance to forecasting wages and prices. These indicators are published together with updates on the output gap and potential growth rate on the "Output Gap, Potential Growth Rate, and Labor Market Indicators" page of the Bank's website.

These estimates are, in principle, released on the third business day in January, April, July, and October.

For further details on these research data, see the following paper: Research and Statistics Department, Bank of Japan, "Updates on the Output Gap and Potential Growth Rate, and Monitoring Labor Market Indicators," Bank of Japan Research Paper, March 2026. (Currently only available in Japanese; an English version is under preparation.)

Inquiries

Economic Assessment and Projection Group,
Economic Research Division, Research and Statistics Department

Tel : +81-3-3279-1111