Japan seems to have gotten a much needed shot in the arm after it won the bid to host the 2020 Olympics in its capital, Tokyo.
The stock market hit a one-month high, while latest figures showed that Japan's second quarter growth was revised upwards to 3.8 per cent.
A senior economist at JP Morgan, Masamichi Adachi, told Radio Australia's program that the world's second largest economy is showing constructive signs of recovery.
"The underlying trend in this growth is that it is very solid, so therefore we can say Japan's economy is doing quite well at the moment," he said.
Mr Adachi added that the games is likely to give Japan a sustained boost, economically and psychologically.
"Probably the biggest point is the sentiment or mood that Japan can host big international games in seven years time, so we need to invest more, and we now feel we can do it again," he said.
As Japan begins its largest project in 42 years in preparation for the Olympics, there is still plenty left to do.
Just last week, Abe's government pledged $US500 million to fix Fukushima.
In addition, Japan faces the problem of massive debt and an ageing population.
Prime Minister Shinzo Abe will also need to take a call on raising the country's sales tax.
The Chief Economist at RBS Securities, Junko Nishioka, says for now though, keeping spending under control will be a priority for the country of about 130 million.