Japan's prime minister dissolved the lower house of parliament Friday to avoid a disastrous freeze in government spending, triggering elections that could result in more aggressive policies to stimulate the country's economy.

Prime Minister Yoshihiko Noda's move, made under pressure from the main opposition Liberal Democrat Party, allows Japan to head off its own "fiscal cliff". In exchange for fresh elections, the LDP gave its support for bonds to be issued to finance government operations for the rest of the year, ending a long-running impasse.

But even with that short-term fiscal crisis averted, Japan still faces substantial challenges as the country seeks to recover from the tsunami and nuclear disasters that rocked the world's third-largest economy last year.

The Japanese economy contracted at an annual rate of 3.5% from July to September, a faster rate than economists had expected. One more quarter of negative growth, deemed likely by analysts, and the economy will be in recession.