The gloomy numbers spell more bad news for the world’s third-largest economy as it struggles to cement a recovery after the 2011 quake-tsunami — the worst nuclear crisis in a generation — and the impact of an export-sapping strong yen.
They also underscore the size of the task ahead for the new government of Shinzo Abe, who won last month’s election on a pledge to boost the economy with big public spending and by pressuring the central bank for a more aggressive monetary policy.
Official figures from the finance ministry showed Japan’s trade shortfall last year totalled 6.92 trillion yen ($78 billion), with the deficit in December alone standing at a higher-than-expected 641.5 billion yen.
The data marked a second consecutive annual trade deficit for the export-reliant economy.
Last year, exports totalled 63.7 trillion yen against imports of 70.7 trillion yen, with post-Fukushima energy imports of expensive fossil fuels surging as all but two of Japan’s 50 nuclear reactors remain closed.
But analysts said the 2012 figures may mark a low point for Japan’s trade picture as the global economy stages a recovery with China and other Asian economies leading the pack, while the US economy also improves.
“The figures will likely be better in 2013 as overseas economies improve,” said Masahiko Hashimoto, an economist at Daiwa Institute of Research in Tokyo, adding that the impact of a territorial feud with China would probably fade.
“The European economy may continue to worsen until the middle of the year but China and other Asian economies are likely to lead the global economy.”
However, he said the deficit would likely remain for the short term as a weakening yen makes overseas energy imports pricier, Hashimoto said.
“But I believe exports will eventually pick up. (The weaker yen) will be a positive for the economy in the long term,” he added.
While Japan ran a 2012 trade surplus with the United States, it recorded an annual deficit of 139.7 billion yen with the European Union, its first as the continent’s sovereign debt crisis crippled demand for everything from Japanese televisions to cars.
The deficit with Beijing doubled to a record 3.52 trillion yen, as a feud over a set of islands in the East China Sea spurred a consumer boycott of Japanese goods in China.
The dispute flared in September after Tokyo nationalised the Senkakus, which Beijing refers to as the Diaoyu islands.
On Tuesday, the Bank of Japan, following government pressure, adopted a two percent inflation target to beat the deflation that has haunted the economy for years and also set out plans for indefinite monetary easing.
Markets have cheered Abe’s strong stand. The Nikkei 225 stock index has soared in the past couple of months, while speculation of monetary easing has sent the yen falling.
That is good news for Japan’s exporters, who have complained about the unit’s soaring value since it hit a record around the 75-level against the dollar in late 2011. A high yen makes Japanese products less competitive overseas.
The dollar bought 89.32 yen in Tokyo forex trade Thursday.
Japan’s economy contracted in the July-September quarter and slipped slightly in the previous three months, meeting the technical definition of a recession.