TOKYO (AP) - Japan posted a smaller-than-expected trade deficit of $9.6 billion for August, as exports to Europe and other Asian countries plunged, further undermining hopes for an export-driven revival.
The 754.1 billion yen ($9.6 billion) deficit in August was smaller than the $9.9 billion deficit reported a year earlier, the Finance Ministry reported Thursday.
Exports in August totaled 5.05 trillion yen ($64.33 billion), down 5.8 percent from a year earlier, while imports fell 5.4 percent to 5.8 trillion yen ($73.9 billion).
The strong Japanese yen has bit into exports while demand has evaporated in crisis-stricken Europe. Meanwhile, the country's energy imports have risen following closures of most of its nuclear plants.
Japan has eked out small trade surpluses in some months this year but reported a record annual trade deficit for the fiscal year that ended in March.
Though the deficit for August was lower than the more than 800 billion yen that some analysts had forecast, prolonged weakness in Europe and recent friction with China, Japan's biggest single overseas market, suggest it will likely persist in coming months.
Exports to Europe sank 28 percent in August from a year earlier, to 484.9 billion yen ($6.2 billion) while exports to Asia - Japan's biggest overseas market - sank 6.7 percent overall to 2.84 trillion yen ($36.2 billion).
Even before a recent territorial dispute flared, sparking riots across China, exports were weakening. They fell 9.9 percent from a year earlier to 966.3 billion yen ($12.3 billion), the Finance Ministry reported.
Moving to spur growth and cushion the impact of the strong yen on exporters, Japan's central bank on Wednesday announced it would boost the size and duration of a government bond-buying program that's intended to encourage borrowing and spending and make Japan's exports more competitive.
"There remains a high degree of uncertainty about the global economy," the bank said, saying that overcoming deflation and returning to sustainable growth was a "critical challenge."
"The pick-up in economic activity has come to a pause," it said, forecasting that activity will remain flat.
Central banks already have pushed short-term rates nearly as low as possible. That leaves government bond purchases as one of their few remaining tools.
The bond-buying program is intended to encourage borrowing and spending and make Japan's exports more competitive by exerting downward pressure on interest rates and on the yen, whose rise has made Japanese products more expensive relative to other countries' exports.
The move appeared to have little immediate impact. Though the Japanese yen weakened Wednesday to 79.17 yen per dollar by mid-afternoon, by Thursday morning it had rebounded, trading at 78.38 yen per dollar.