That was the view of local obervers this week -- who also warned that some businesses could still fail even as the economy expands.

There remains concern that some businesses will still fail, after taking a beating during the recession. It is believed that in some cases not a whole lot will be needed for some firms to collapse.

It is also projected that the job picture may take some time to get better.

Finance Minister, the Hon. Dr. David Saul, said that he was optimistic about the near future.

He said: "I am quite bullish on the next three years. New business opportunities are available for the taking. The trust business is beginning to grow. There will eventually be new opportunities through the arbitration centre.'' But he did express some concern that the construction industry is still slow.

"The construction industry is the bed-rock of people who are unemployed or under-employed.

Construction is one of the few areas that remains slow.

"There will be some construction projects soon, such as the new school at Prospect, three large buildings in Hamilton, the multi-storey car park and the Financial Centre. We must make sure that they are not all started at the same time. And there is no telling how long it will take to get them on line.'' The Government expects that year-end figures to April will show a balanced current account, and no real overruns in budget estimates.

If Bermuda has begun its ascent from the depths of the worst recession since the 1930s, at least some financial minds would say that Bermuda still suffers from a problem of low productivity.

Even Bank of Bermuda executive vice president, Mr. William Thomson, sees productivity as an issue.

He said: "Productivity has gotten better, but it still has a long way to go.

The standard of service in North America and even in Europe has arrived at a point where people are falling all over you to give better service.

"We in Bermuda have to get better.'' One financial analyst said: "Quite frankly, Bermuda is over-staffed, over-paid with low productivity.'' He sees it as a real issue that will have to be addressed at some point, despite improvements elsewhere in the economy.

Tourism has strengthened, yet it may be difficult to shake the image of Bermuda which developed during the recession of a short-term getaway destination.

Visitor spending is said to be on the increase, cruise ships have started to arrive with an abundance of holidayers.

In February, the volume of retail sales improved to 5.3 percent year over year -- the highest level in 12 months.

But a Ministry of Finance spokesman said caution will be one of the watchwords.

"It will be important for companies to look at their financial positions and strengthen their balance sheets during this recovery period,'' he said.

"If companies are not profitable in 1994, something is wrong.'' He noted some companies have struggled for three or four years now and have become fragile and financially damaged. They are in a weaker position.

Economy watchers believe that there will be a continuing restructuring in the labour market. Hiring will not speed up, and in some cases workers will learn that they won't get large increases in pay.

Bermuda, they say, has become slightly more competitive than we used to be, but we can't afford to rock the boat with labour unrest that will hurt the tourism industry. Wage hikes, they said, will have to be reasonable.

We were also told by one economic expert that this year will be the financial crunch.

"This year companies will have to improve their gearing (borrowing) ratio, their ratio of debt to earnings. Some are in a bad state.

"Some jobs will go by the wayside. The restructuring after a recession is like the aftershocks in the wake of an earthquake. Those aftershocks will be with us for some time. Yes, some people will lose thier jobs. There are far more companies with more people chasing less business.'' Analysts we spoke to this week were all quick to point out that there remained dangers out there. One potential problem is labour unrest, which they say could upset the apple cart by interrupting the tourist flow.

Bermudians have been working to ward increasing savings during the recession, and liquidity remains high.

Mr. Thomson said: "In my 40 years at the bank, I have never seen people so focused on reducing their debt than they are today. It could still be an orderly recovery. Many people are electing to save their money.'' SALES IMPROVE -- Retail sales have improved in real terms for the last four consecutive months and in nine of the last 12. February's 5.3 percent increase was boosted by heavy pre-Budget liquor buying and unusually low car sales last February. A heartening sign for lcoal businesses was a decline in overseas purchases by residents.