After more than a decade, economists have failed to reach a consensus about the nature of Japan's prolonged economic malaise. Hardly surprising, then, that there is little agreement about the strength and durability of its recovery. Japan, now in its eighth quarter of growth, is enjoying its fourth upswing since its asset bubble collapsed in 1990. But to many, this recovery looks like the three that came before: a product of external demand and confined to the dynamic, but relatively small, export sector. That, say pessimists, means that, once demand from the US and China abates, Japan will be back where it started - scraping along the bottom of another lost decade. Optimists see things differently. This time, they say, corporate Japan has restructured and the state has at last embarked on meaningful reform, particularly of the ailing banking sector.
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