It is a commonly-held view among Japanese government and analysts that the country's economy has bottomed out in the first quarter this year, but it might be too upbeat to hope for a V-shaped rebound.

Since the outbreak of the financial crisis in September last year, demand fell sharply in major Japanese export destinations such as Europe and the United States. As a result, Japanese corporate earnings deteriorated, equipment investment contracted and personal consumption plunged.

The world's second-largest economy sank into the worst post-war recession, with the gross domestic product fell at an annual rate of 13.5 percent and 14.2 percent in fourth quarter of last year and this year's first quarter respectively, even much worse than in the Europe and the United States.

As the government's massive economic stimulus plan began to show effects in the second quarter, signs of improvement are shown in the country's business inventory, export, mining and industrial production index. The government and the central bank also confirmed the economy has started to pick up in official documents.

However, experts warned the road to recovery might not be a smooth one. They believe due to the high degree of dependence on external demand, Japan's economic recovery will be slow and a tortuous process, much alike a "W" shape.

Experts and scholars hold different views about the timing of U. S. recovery, Japan Corp.'s No.1 overseas market. The most optimistic estimate is that the U.S. economy may start picking up in the third quarter this year, while the European Union may took a longer time.

The ministry of internal affairs' latest data show that in May, despite the government policy to stimulate the consumption of eco- friendly household appliances, the overall household consumption is still at a low ebb.

Business sentiment among major Japanese manufacturers improved for the first time in the second quarter since 2006, but the rebound was smaller than expected, the Bank of Japan said in its quarterly Tankan survey published on July 1.

Despite the improvement in big companies' sentiment, small companies were more pessimistic overall, with their index covering all industries dropping 2 points to minus 49, the Tankan survey said.

Another recent Nikkei survey showed all the industries of Japan planned a total investment 22.7 trillion yen in the fiscal year from April 2009 to March 2010, down 15.9 percent from the previous fiscal year, the biggest drop since data became available in 1973.

Furthermore, the Japanese unemployment rate rose to 5.2 percent in May, increasing consecutively since February. At the same time, sluggish performance prompt enterprises to slash wages, further containing personal consumption.

After staging a impressive comeback, Nikkei index also seemed to have lost steam after topping the 10,000 line in mid-June from its low of the 6,000 range in March. Market analysts are closely watching what direction the market is going to choose.

As the string of alarming data have illustrated, although some of Japan's economic indicators have been brighter, the Japanese economic outlook is more of a murky picture and many uncertainties still remain.

(Xinhua News Agency July 7, 2009)