Excess in supply was eliminated in Japan's gross domestic product in the fourth quarter of 2005 for the first time in about eight years, the Cabinet Office said Monday.
The finding after a close analysis of GDP data in the quarter means that demand outstripped supply, marking a step toward the current administration's policy goal of pulling Japan out of deflation during fiscal 2006 to March 31, 2007.
The so-called GDP gap represents the difference between a nation's potential GDP capacity and actual GDP performance. A positive gap means prices tend to rise on greater demand than supply.
Government economists maintain a cautious stance on whether they should declare an end to Japan's deflation, noting that they need to analyze more economic data, including the GDP deflator, a key price change gauge.