Japan says its economy surged early this year, a first signal that new stimulus policies may be reversing the country's two-decade-long economic malaise.

The government said Thursday the country's economy, the world's third largest, grew by an annualized rate of 3.5 percent in the January-to-March period -- a marked contrast from the weak growth at the end of last year and six months of contraction earlier in 2012.

Since Prime Minister Shinzo Abe took office in late December, he has embarked on a large spending plan and appointed a new Bank of Japan governor who has overseen a massive purchase of government bonds to boost the economy. Economy minister Akira Amari said it is the beginning of a recovery.

"Thanks to the new style of policies that the Abe cabinet have implemented, we have taken the first step towards a new type of economic recovery. Now it's a question of making sure that we keep on track, by making sure that we follow through with our policies.''

The government said consumers spent more on recreation, cars and dining out, while automakers exported more cars to the United States.

Analysts cheered the Japanese advance in the first quarter, but questioned whether it can be sustained. The chief economist at Japan Macro Advisors, Takuji Okubo, noted that half of the growth came from government spending.

"Three point five percent annualized growth is a great growth for Japan. So that itself is pleasing for the markets as well as for the politicians. However, when you look into the contents of the growth, you do see that half of the growth is coming from public demand, such as public works, government consumption and that is still concerning, and that says that Japan's economy is still not self-sustaining.''