Japan's trade deficit widened sharply to a record in 2013 as import costs outpaced export receipts due to a weaker yen and higher fuel bills.
The third annual shortfall in a row was a reminder of the challenge facing Prime Minister Shinzo Abe.
The record run of annual deficits by a nation that for decades had racked up hefty trade surpluses has raised questions about how Japan can fund and contain public debt of over $10 trillion, or more than twice the size of its economy.
Abe's reflationary policies have weakened the yen, driving up the value of export receipts in yen terms and boosting exporters' earnings, but so far have failed to shore up volumes.
Economists have anticipated a so-called "J-curve" effect from the weak yen, where a spike in import costs would over time be more than offset by gains in exports.
But the currency's decline has not led to the export turnaround needed to bring the trade balance back into the black, because exporters have not yet passed on their price advantage to customers overseas.
Ministry of Finance data today showed exports rose 9.5% in 2013, the first gain in three years, but export volumes fell 1.5%, a third consecutive fall.
Japan's annual trade gap was a record 11.47 trillion yen ($112 billion), about two-thirds larger than 2012's 6.94 trillion yen shortfall. It was the third annual deficit in a row, the longest run in the data that goes back to 1979.
Analysts say monthly trade deficits may narrow in coming months as a global recovery boosts export demand and a surge in consumer spending eases after a sales tax increase in April.
The MOF data showed exports rose 15.3% in December from a year earlier, led by car exports to the US, a key market. While below economists' median forecast for a 17.8% gain, it was a 10th consecutive month of gains.
Imports rose 24.7% in December from a year earlier, compared to an expected 26.1% gain. Import costs have risen both due to the weaker year and higher fuel imports after Japan shut down nuclear power plants following the Fukushima disaster in 2011.
Japan's current account logged a record deficit in November, remaining in the red for second month.
Some analysts say trade shortfalls could pull the current account into the red in coming years, meaning that Japan may start chipping away at its vast pool of domestic savings and increasing the need to rein in its huge public debt.