Finance Minister Pranab Mukherjee on Sunday said the global economic recovery is fragile and cautioned that emerging economies may not be as resilient in the face of another crisis.
"Countries are recovering at different rates. Growth is well below potential. And the recovery is fragile. There is a constant danger of recovery being derailed by unexpected shocks," he said in his address to the International Monetary Fund and World Bank Group Development Committee Meeting.
He further cautioned that the world economy is passing through a lot of uncertainty. The financial and economic crisis is yet to run its full course and economies have yet to fully recover from its after-effects, he added.
"Through coordinated action, we were able to avert a prolonged recession...The prospects are, however, full of uncertainties. Recovery continues across the world, but it is uneven," he said.
He appreciated the remarkable resilience shown by developing countries in dealing with the crisis. "However, they have exhausted their policy buffers built up over the years and would not be able to show the same resilience in the face of another shock," he said.
While developed world has been witnessing fragile economic recovery after hit hard by the financial meltdown, started by the sub-prime crisis, Asia is expected to drive the global growth.
In fact, IMF recently warned that the United States was staring at a sluggish recovery from severe recession in the face of weak consumer spending and high debt.
Growth in the world's largest economy slowed to 1.7 per cent in the the second quarter of this year from a 3.7 per cent pace in the first quarter, and key indicators suggest "a weak recovery in coming quarters," the IMF had said.
Europe, on the other hand, witnessed sovereign debt crisis in some of its countries, but that did not spread.
However, the World Bank warned that Eastern and Central European countries could face another economic slowdown if their Western neighbours cannot gain control of their finances.
On the other hand, IMF expect Asia to continue leading the global recovery.
"China and India will continue to lead the region's growth. For China and India, we project growth in 2010 at 10.5 per cent and 9.7 per cent respectively," the IMF Director for Asia and Pacific, Anoop Singh had said.