Japan's exports rose in the year to August at less than half the pace expected as a global economic slowdown, a strong currency and Europe's sovereign debt crisis put the country's own recovery increasingly in doubt.
The data are likely to provide little comfort as the country's newly formed government tries to kickstart reconstruction spending to prevent a strong yen and waning global demand from snuffing out a rebound after a massive natural disaster in March.
Weak exports are also an ominous sign as the U.S. Federal Reserve could inch toward easing policy, which could potentially push the yen even higher versus the dollar and worsen Japan's terms of trade.
The impact of the slowing global economy is starting to become visible in Japan's export figures, said Takeshi Minami, chief economist at Norinchukin Research Institute.
In coming months, exports may go back to posting year-on-year declines, meaning the economy will have no sufficient support factor unless the government quickly implements reconstruction spending.
Exports rose 2.8 percent in August from a year earlier, much less than a median forecast for an 8.0 percent annual increase, Ministry of Finance data showed on Wednesday.
The gain was due to increased shipments of autos, metal processing equipment and ships.
Compared to the previous month, exports rose 0.3 percent on a seasonally adjusted basis.
Imports rose 19.2 percent in the year to August, more than the median estimate for a 14.0 percent annual rise.
The nation's trade balance registered a deficit of 775.3 billion yen ($10.1 billion), versus the median forecast for a 218.8 billion yen deficit.
Shipments to China rose an annual 2.4 percent while those to the United States rose 3.5 percent.
Economists say Japan is likely to resume growing in the third quarter after three consecutive quarters of contraction, boosted by a rapid recovery in supply chains following the March 11 earthquake, but the outlook further ahead looks increasingly in doubt due to a strong yen and Europe's sovereign debt crisis.
Europe's woes, weak economic growth in other advanced countries and moderating growth in emerging markets top the agenda for a Group of 20 finance ministers' meeting this week.
Japan is trying to recover from its worst crisis since World War Two after the March 11 earthquake and tsunami devastated its northeast coast and triggered radiation leaks at a nuclear power plant.
($1 = 76.450 Japanese Yen)
(Writing by Stanley White; Editing by Edmund Klamann)