Japan's exports growth accelerated in July driven by weaker yen and imports strengthened as rising wages boosted domestic demand, data published by the Ministry of Finance showed on Wednesday.

Exports posted an annual growth of 10.3 percent, stronger than June's 5.4 percent increase. Shipments have been rising since last December. However, the latest increase was weaker than the expected growth of 11.4 percent.

At the same time, imports registered a robust 16.6 percent expansion, beating expectations for an increase of 14.9 percent. This follows a 3.2 percent rise seen in June. Moreover, imports increased for the fourth straight month.

Due to the strong growth in imports, the trade deficit totaled JPY 621.8 billion in July compared to a surplus of JPY 223.98 billion in June.

In the same period last year, the deficit was JPY 61.32 billion. Economists had forecast a shortfall of JPY 330.7 billion.

Data showed that exports to the European Union declined 5.3 percent, while that to the United States gained 7.3 percent and to China moved up 7.2 percent.

Foreign demand for Japan's chip machines, chips and computer parts posted robust annual growth. The increase in car exports was 6.2 percent.

In the second quarter, driven by consumption and investment, the Japanese economy expanded 0.8 percent sequentially, reversing a 0.6 percent fall in the first quarter. The contribution to growth from the net trade was negative as imports growth exceeded the increase in exports.

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