Japan makes possible comeback

Look what's returned to Japan after an extended absence: economic growth.

Last week, the Japanese government reported an unexpectedly strong 1.9 percent growth rate during the first three months of this year.

It's the first sign since the summer of 1997 that the world's second-largest economy is expanding.

Officials credited the news to Japan's massive public-works spending over the past year.

Finance Minister Kiichi Miyazawa called the gross domestic product report "the light at the end of the tunnel."

If the pace set last quarter continues, Japan's growth rate will hit a respectable 7.9 percent for 1999. Such an occurrence would mark an end to the country's worst recession since World War II.

But some economists aren't so sure Japan has bottomed out. "These numbers aren't in line with other economic indicators that came out during the period. I would be skeptical," says Andrew Shipley, economist at Schroders Securities Ltd in Tokyo.

Even if it's not clear where the economy is headed, the figures jolted Japan's financial markets. Tokyo's Nikkei Stock Average surged above 17000, and the US dollar sank against the yen after the GDP numbers were leaked to a local paper last Wednesday.