The government is resisting pressure to spend more on stimulating its domestic economy, saying it should now manage to avoid sinking back into recession.

But Prime Minister Yukio Hatoyama said it should still be ready to act if necessary given lingering downside risks such as unemployment.

"I think we can avoid a double-dip but it is important to prepare so we are able to take appropriate steps as needed," Hatoyama told lawmakers in Parliament.

Finance Minister Naoto Kan said it was too early to mention additional stimulus spending but that the government may consider tapping reserves set aside in 2010/11 budget to support a fragile economy without boosting fresh debt issuance.

The government will also mull introducing bills aimed at restoring the country's fiscal health to Parliament as early as by June when it maps out its long-term fiscal plan, he added.

"The legislation will include our thinking on fiscal rebuilding and the course to achieve that," Kan told reporters.

He did not elaborate further.

A tiny coalition partner in the Democratic Party-led government has called for 11 trillion yen in fresh stimulus to boost the economy before an election expected in July, amid sliding support for the government.

But analysts said big spending is unlikely as public debt is already nearly twice the size of Japan's GDP, the highest ratio among its peers in the industrialized world.

The government is keen to contain any further increase in bond issues amid the threat of a credit ratings downgrade.

Fitch, Moody's and Standard and Poor's have all warned Japan it faces a ratings downgrade, which could raise the borrowing costs for the most indebted of the industrialized nations and rattle investors who are already nervous about Greece's debt and the sovereign risk facing other European nations.

Some investors and government officials worry that the fiscal framework could bring Japan closer to a downgrade if it does not include a credible plan to reduce the debt burden.

Kan said the Democrats will need to review their campaign pledges so as to keep spending in check. But the minister added that he cannot relax his guard against risks to the economy, which he said has not yet returned to a sustainable growth path.

Most economists expect a strong recovery in Asia to help Japan sustain its export-driven pickup from its worst recession in post-war history.

Meanwhile, Japan's exports soared at the fastest pace in about three decades last month, helping the world's No. 2 economy to extend a recovery from the worst recession in decades, data showed Wednesday.

Worldwide demand for Japanese cars, electronics and other goods are rebounding after collapsing during the global economic crisis which erupted in 2008.

Exports in February leapt 45.3 percent to 5.13 trillion yen ($56 billion), the fastest year-on-year growth since April 1980, according to the Finance Ministry.

While exports are still about one quarter lower than their level two years ago, the picture has brightened significantly compared with February 2009, when shipments roughly halved from a year earlier.

Last month Japan's trade surplus surged more than nine-fold to 651.0 billion yen ($7.2 billion) from 70.8 billion a year earlier, topping market expectations.

Shipments of automobiles more than doubled despite the safety woes of Toyota Motor, which has recalled more than eight million vehicles worldwide. Auto part exports rose 121.7 percent while electronics components were up 69.1 percent.

Imports increased 29.5 percent to 4.48 trillion yen owing to higher prices of oil and nonferrous metals.

Japan's surplus with the United States surged 173.0 percent to 395.9 billion yen and with the European Union it rose 69.9 percent to 165.9 billion yen.

With China, Japan's biggest trading partner, the trade balance slipped into a deficit of 24.6 billion yen from a year-earlier surplus of 10.6 billion yen.

Japan's exports to China grew 47.7 percent on robust shipments of cars and parts but imports rose by a brisker 54.3 percent due to increased purchases of clothing, audio and video devices, computers and other electronic equipment.