IMF warning for developing world
The International Monetary Fund (IMF) has warned that emerging
economies will not be immune from a slowdown among wealthier nations.
In a speech in New Delhi, IMF managing director Dominique
Strauss-Kahn said the links between the West and countries such as India
remain strong. As a result the US slowdown will effect developing
nations, he said. To cope with that, he called upon emerging nations to
manage their finances and regulatory systems carefully.
According to the IMF, in the past a 1% decline in US growth had led
to a decline in growth in emerging economies by between 0.5% and 1%,
depending on trade and financial links to the US.
But some argue that link has weakened, and countries such as China
and India have "de-coupled" from the West.
The reasoning is based on statistics that show developing countries
trade more among themselves than ever before. Strauss-Kahn said that
often goods traded among developing nations are eventually exported to
the US or Europe. He also warned that emerging nations need to make sure
their finances are in order and their regulatory systems can cope in
case of a slowdown. |