Japan's economy is running the hottest relative to capacity since the global financial crisis. More than four years after the Bank of Japan launched its radical monetary easing, key conditions are aligning in its long battle to truly escape from deflation.
The latest reading of the nation's output gap, released Wednesday, is another milestone on the journey to that escape, economists say.
"The positive output gap shows Japan is making progress toward becoming a normal economy," said Hiroshi Miyazaki, senior economist at Mitsubishi UFJ Morgan Stanley in Tokyo. "We are now in a similar situation as before the Lehman shock in 2008, when Japan enjoyed a prolonged recovery thanks to a global economic expansion."