The International Monetary Fund has said emerging markets, including India, has been hit due to high commodity prices, financial constraints and weak external demand amid the global economic crisis.
Addressing reporters on the occasion of release of G-20 Surveillance Note in Washington on Thursday, senior IMF officials, however, emphasised that the world body expects advanced countries to turn around and grow at a moderate pace in 2010.
"So while growth is slowing down, different regions are being affected differently depending upon how the transmission affects each country in the region," an IMF official said asking reporters not to name senior officials who held the briefing on the occasion.
China, for example, the official said is already putting very substantial stimulus and IMF is already seeing some signs of a firming of activity in China, which they said is very welcome.
"However, other emerging economies that rely for example on commodity exports or on exports of manufacturing goods to the advanced economies will find it very difficult to recover in any sustained way until we see the recovery coming in the advanced economies," the official said.
Asked if Europe should do more, the official said: "The message is clear that the outlook is weaker going forward."
"Second, progress in putting in place policies to deal with the financial crisis has been slow and financial strains are likely to place a continuing drag on activity," the senior IMF official said.
Observing that credit conditions remain severely impaired and uncertainty about bank balance sheets remains high impeding a return of market confidence," the official said.
"We do still see a global recovery getting gradually underway in 2010, but I should emphasise that the turnaround depends on strong policy implementation."
Asserting that there will be no enduring recovery until financial-sector stability is restored, the official said this will require determined and well-coordinated policy implementation by financial authorities.
"The essential elements include credible recognition of losses in problem assets, public support for the recapitalisation of weak but still viable banks and for the effective resolution of insolvent banks," he said.
"It will be important for greater international coordination of financial-sector policies to avoid unintended cross-border spillovers. It will also be important that actions taken be consistent with a long-term vision of a healthy, efficient and dynamic financial system," the senior IMF official said.
