After climbing past the psychologically important 20,000 barrier for the first time in more than 2 1/2 years early last month, the 225-issue Nikkei average now is languishing at around 19,500.

Although the closely watched barometer is in a corrective phase, its rise to 20,000 deserves close attention because it overcame downward pressure from sales to liquidate cross-shareholding ties and plunges in U.S. stocks.

Nevertheless, it is premature to say the Tokyo stock market has completely pulled away from the adverse effects from the bursting of the asset-inflated economic bubble of the late 1980s.

I say this because the Nikkei average has yet to clear its postbubble high of 22,666.80 set on June 26, 1996.

In other words, the economy cannot be considered on a full recovery path before the Tokyo stock market clears this level.

The financial revitalization law has relieved the stock market from the unrest caused by successive financial failures, while economic activity bottomed out last spring thanks to fiscal spending of more than 100 trillion yen and ultraeasy credit symbolized by the Bank of Japan's "zero" interest rate policy.

Stagnant corporate capital spending, regarded as a drag on the economic recovery, is increasingly expected to hit bottom in the first half of fiscal 2000 on the back of soaring investment in information technology and improving corporate earnings.

If capital spending picks up, personal consumption will increase as the income of consumers grows.

Under such circumstances, a self-sustained recovery led by private demand, as envisaged by the government, may come into play.

A matter of concern, if any, is whether Japan can reduce its heavy reliance on the U.S. economy at a time when the U.S. Federal Reserve is aiming to engineer a soft landing in which growth slows enough to keep inflation from getting out of hand.

If U.S. growth slows enough, Japan's exports will unavoidably decrease. And if consumer and business sentiments weaken rapidly, the nation's economic recovery will be dampened.

Japan needs to promptly change its export-reliant economic structure and instead expand domestic demand.