TOKYO (Reuters) - A middle-aged holy woman from India has come up with a remedy for Japan's economic blues that has escaped even the most astute politician -- give everyone a hug.

For the past three days, thousands of Japanese have flocked to a hall in Tokyo for a loving embrace from Ammachi, a woman from India's southern state of Kerala on the Japan leg of her world hugging tour.

A hug from Ammachi, short for Mata Amritanandamayi Devi, is said to bring happiness -- something that many Japanese feel is in short supply as the nation's economic slide throws more people out of work and cuts into their savings.

All this week, people have been lining up patiently outside Ammachi's carpeted room, breathing in the incense-filled air and listening to strains of Hindu devotional songs.

"Japan is suffering from deflation and I think there are a lot of people who want to be helped," said one businessman, who had already been hugged twice.

"I don't think so many people would come here if the economy were better."

Hugging is not a common custom in Japan and many people were overcome by emotion when embraced.

"When you watch the news or read the newspaper, there are so many depressing things, but that's not all there is in the world. That's what I felt when she embraced me," said housewife Teruko Nakamura as she dabbed her eyes with a handkerchief.

The 51-year-old holy woman attributed the emotion to nothing more than a lack of love in the modern world.