Japan's trade deficit rose to a record level last year as fuel imports surged, demand in debt-hit Europe lessened and a bitter territorial dispute with China affected its exports.

Official figures from the finance ministry on Thursday, showed Japan's trade shortfall last year totalled $78bn (6.92 trillion yen), with the deficit in December alone standing at a higher-than-expected 641.5 billion yen.

Shinzo Abe, the new prime minister of the world's third largest economy, pledged to boost the economy with big public spending and by presurring the central bank for a more aggresive monetary policy.

"The figures will likely be better in 2013 as overseas economies imporove," said Masahiko Hashimoto, an economist at Daiwa Institute of Research in Tokyo, adding that the impact of the territorial feud with China is likely to fade. 

He added that the deficit was likely to remain for the short term as a weakening Yen makes overseas imports pricier. 

"But I believe exports will eventually pick up. (The weaker yen) will be a positive for the economy in the long term," he said also stating that China and other Asian economies are likely to lead the global economy.

The European debt crisis crippled demand for Japanese products, leading the country to record a 138.7 billion Yen annual deficit with the EU.

A consumer boycott in China - world's second largest economy - due to a disputed set of islands in the East China Sea doubled its deficit with Beijing to a record 3.52 trillion yen.

Al Jazeera's Scott Heidler said "Abenomics" as a part of the $117b stimulus package implemented by the new Prime MInister and has both "short term and log term impacts here in the region". 

Reporting from Thai capital Bankok, Heidler said that as the Japanese Yen became weaker, it strengthened the Thai economy and the Baht.

He added that if Abe's plan for the Yen kicks in there may be an increase in trade within the region.