Exports in July contracted 14.8 per cent, steepest fall in three years, to 22.4 billion US Dollars. This is mainly due to the demand slowdown in the US and Europe. Reflecting slowdown in the economy, imports too declined by 7.61 per cent to 37.9 billion dollars in July, leaving a trade deficit of 15.4 billion dollars. During the April-July period of the current fiscal, thecountry's shipments have shrunk by 5.06 per cent to 97.6billion dollars. Imports during the period dipped by 6.47 per cent to 153.2 billion dollars.Commerce Secretary S R Rao has said the European sovereign debt crisis is impacting the world trade and in theUS markets too, demand is not picking up. Director of Indian Institute of Foreign Trade (IIFT) K T Chaco said that market diversification will alone not help Indian exporters till the major markets are down.