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Economy fears driven home at Davos

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  • IMF chief warns of major scope of financial turmoil
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By Barry Neild
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DAVOS, Switzerland (CNN) -- Global finance chiefs drove home warnings over the market crisis Saturday, as concerns of a possible recession continued to trouble a meeting of world powerbrokers in Switzerland.


Japanese Prime Minister Yasuo Fukudo addresses the Davos Forum.

The head of the International Monetary Fund said the current turmoil had reached levels never seen before, echoing anxieties that have dominated the annual World Economic Forum meeting in Davos.

IMF Director-General Dominique Strauss-Kahn's comments came as the first protests to target this year's event gathered outside the Forum's tightly-guarded venue, a handful of demonstrators defacing posters and throwing snowballs.

Strauss-Kahn said not even emerging economies touted as safe bets for short-term growth would escape the impact of problems that drove the U.S. Federal Reserve to deliver an emergency rate cut.

"Emerging countries are doing very well, but they will be doing very well but they will be affected also because they are not immune," he told CNN.

Strauss-Kahn warned the IMF itself will need an overhaul to tackle the crisis, reiterating earlier pledges of reform.


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"To address a crisis like this, which is probably one of the first multilateral or global crisis, we need to have a multilateral or global answer and address all the imbalances," he said, adding that he approved of efforts taken so far by the Fed and other institutions to stem problems.

Strauss-Kahn said the gloomy sentiments over financial slowdown and tightening credit conditions had overshadowed the five-day Davos meeting, despite a worthy agenda aimed at seeking solutions to global warming, poverty, and disease.

More than 2,500 members of the business elite, heads of state and celebrities including Microsoft's Bill Gates, rock star campaigner Bono and U.N. chief Ban Ki-moon gathered for this year's Forum.

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On Saturday, Japan's Prime Minister Yasuo Fukudo, told the meeting there was a need for a "sense of urgency" in tackling the financial crisis, but he warned against an "excessively pessimistic" view.

Later, in an exclusive interview with CNN, Fukudo said Japan -- the world's second largest economy -- had a duty alongside other leading players to take action to calm currency markets.

Fukudo, who Saturday met with Bono, former UK Prime Minister Tony Blair and Gates, also expressed hope that initiatives driven by Japan -- which is chairing this year's G-8 meeting in Tokyo -- would open a new front in the battle against global warming.


"Japan should be taking the lead in the technology area. Japan takes pride in the fact that its energy conservation technology is the No.1 in the world, therefore we have the responsibility I believe to transfer the technology to emerging countries and economies."

Fukudo also confirmed that Bono had presented him with an iPod, branded with the rock star's charitable initiative RED that donates proceeds to alleviating developing world poverty. E-mail to a friend E-mail to a friend

CNN's Becky Anderson contributed to this report

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