At the beginning of the month, the IMF predicted that the emerging economies would continue to grow at more than 6 percent even as the US, Europe and Japan slid into recession. Now many of these countries are confronting economic turmoil—hit by shrinking export markets and slumping commodity prices as well as the global credit crunch. Foreign investors have withdrawn money to seek safer havens and to deal with cash shortages at home, causing currencies and stock markets to collapse dramatically in vulnerable emerging markets.

The Institute of International Finance in Washington estimates that more than $20 billion has flooded out of emerging market stock exchanges in the third quarter. The benchmark MSCI emerging markets index hit a four-year low on Tuesday, falling by 45 percent since September 15, before bouncing back later this week following the announcement of IMF plans.

Writing yesterday in Der Standard, IMF managing director Dominique Strauss-Kahn said that the emerging economies "aren't just facing falling exports and tumbling confidence... They're the latest victims of a financial crisis that started in the United States and spread to Europe and is now moving beyond Europe's borders." The drying up of global credit had dealt "a heavy blow" to these countries, he explained, warning of widespread payment defaults, protectionism and banking controls. "That will set not only these countries, but the entire world economy back years," he wrote.

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