Japan's annual trade deficit rose to a record $78 billion in 2012, according to official data from the Ministry of Finance.
Japan, a nation whose export-driven wealth has traditionally been built on trade surpluses, had a second straight year of trade deficits thanks to a persistently high yen, trouble with trading partner China and weakening demand in the eurozone.
Exports fell 5.8% in December 2012 compared to a year earlier due in large part to a strong yen which makes Japanese exports more expensive overseas.
A protracted territorial dispute with China in the South China Sea has also seen Beijing slow its imports of Japanese goods. Japan's exports to the country plunged 10.8% in December year-on-year.
Imports grew 1.9% over the same period, with mineral fuels including oil accounting for 34.1% -- and the majority -- of Japan's total imports for the year.
Late last year, then-prime ministerial candidate Shinzo Abe campaigned on a mission to turn his country's economy around. His government unveiled $117 billion in new stimulus earlier this month.
"Beating deflation and curbing the yen's appreciation is crucially important," Abe said on January 10 and that a "daring monetary policy is essential."
Earlier this week, the Bank of Japan signed on to Abe's plan to raise inflation to 2%, with the hope of pulling the world's third largest economy out of a two-decade slump of deflation.
Since mid-November, Japan's currency has weakened more than 9% and to a two-and-a-half year low -- boding well for Japan's exporters.
Abe, who served as Japan's premier from 2006 to 2007, was sworn back into the office on December 26.