IMF warns of serious meltdown

PARIS: All developed countries are suffering from the slowdown in the US putting the world economy in a serious situation, IMF Managing Director Dominique Strauss-Kahn said yesterday.

His comments came after world stock markets fell sharply and demand for safe-haven bonds.

"The situation is serious," he said.

He warned that emerging market growth could also be dragged down by the outlook in the US.

Meanwhile, top European finance officials stressed that their economies remained solid as global stock markets plunged on concerns about a risk of recession in the US.

"The excess of volatility of the markets is not good news," EU Economic and Monetary Affairs Commissioner Joaquin Almunia said.

"I hope they will become more quiet because at least in Europe the fundamentals of our economies are sound," Almunia added.

Seeking to allay fears about the impact of US weakness on Europe, Dutch Finance Minister Wouter Bos said a US slowdown "will have an impact on the European economy but it will be moderate."

"We are all concerned. We are following the events on a daily basis, we hope things will not be as bad as they may look," said Slovenian Finance Minister Andrej Bajuk, whose country holds the rotating EU presidency.

Spanish Finance Minister Pedro Solbes acknowledged: "We are worried in the sense that we have to follow what's happening every hour and to try to understand what's happening."