In addition a rise in the value of the yen – up 12.4 per cent on last year - has hit exports of cars and electronics which are traditionally some of Japan's biggest overseas earners.
"It is questionable whether exports will continue to recover once the stimulus effect runs out because global final demand may not turn up fully"
Seiji Shiraishi, HSBC Securities chief economist
According to the latest data, the value of exports fell to 4.84 trillion yen ($51.4bn), hit by decreased shipments of automobiles and steel.
On a seasonally adjusted basis, exports fell 1.3 per cent in July from June, the first drop in two months.
Imports meanwhile plunged 40.8 per cent to 4.46 trillion yen ($47.4bn), giving Japan a trade surplus of 380.2 billion yen ($4bn) for July, up more than four-fold on a year earlier.
The continuing slide in exports comes as the world's second biggest economy limps out of its worst recession in decades.
Japan entered recession in the second quarter of 2008 as its heavy dependence on exports to drive growth left it highly exposed to the global downturn.
It emerged from recession in the financial quarter ending in June after recording a 0.9 per cent growth in gross domestic product, boosted by government stimulus measures at home and abroad.
But economists have warned that as fiscal support for the global economy runs its course, Japan's exports could slow yet further as falling salaries and rising unemployment mean consumers will be unable to pick up the slack.
Seiji Shiraishi, chief economist at HSBC Securities, told Reuters news agency the continuing slide in Japanese exports was an indication that any momentum towards recovery was "losing steam".
"It is questionable whether exports will continue to recover once the stimulus effect runs out because global final demand may not turn up fully."