IMF: Emerging economies are not immune to US financial crisis

The International Monetary Fund Director General Dominique Strauss-Kahn warned that emerging economies are not immune to a slowdown resulting from the financial crisis in United States and thus must prepare to cope with the negative effects. “What at first was a problem for financial institutions it has become a problem for all economies. This is clearly the case of United States, I think it is clear Europe is on the same track and I don’t believe emerging economies are immune to this crisis”, said the IMF chief. According to Strauss-Kahn, industrialized countries and emerging economies are like two horses trotting together. “If one of them is tired the other can carry the load for some time but if both stop suddenly, none of them will be able to advance much more”, he illustrated. He advised the emerging economies to get ready to cut interest rates and to apply budget and fiscal instruments to re-launch their economies. Last month, the IMF cut its forecast for world growth this year in the face of continued stress in global credit markets, and warned that economic activity could slow even further.