US slowdown could last longer - IMF

Mumbai: The econ-omic slowdown in the US will be significant and will last for some time, the chief of the International Monetary Fund said yesterday at the beginning of a three-day visit to India.

Slowing of the US economy has worried investors and policymakers and concerns have also surfaced that the US downturn is spreading to the 15-nation euro zone economy.

Comment

IMF managing director Dominique Strauss-Kahn told a conference in the country's financial capital yesterday that decoupling between emerging markets and developed econ-omies was a "misleading idea".

"US slowdown will be both significant and will last for some time," he said in a speech.

"Decoupling is a very strange idea, very misleading idea. The linkages between the financial and real sector, developed and emerging markets, are much more complex than they were before."

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.

The fund lowered its global 2008 growth projection to 4.1 per cent from 4.4 per cent, reflecting a marked slowdown from the 4.9 per cent pace achieved last year.

Caution

It has also cautioned that the main risk to the global outlook was ongoing turmoil in financial markets, which would further reduce domestic demand in advanced economies and create more significant spillovers into emerging markets and developing economies.