Emerging economies like India, which is expanding rapidly, are not insulated from the impact of a slowdown in the US and would feel the pinch "sooner or later," the International Monetary Fund said on Wednesday.
"The industrial and emerging economies are like two horses yoked together," IMF Managing Director Dominique S Kahn said, adding that nations world over would have to face the impact of global financial crisis "sooner or later".
Kahn, who is on a three day visit to India, also underlined the need for a global solution to the problem of financial crisis, which could have a ripple effect on several economies.
While firming up their response to the global crisis, he suggested, the emerging economies should consider the scope of monetary easing and their ability to provide fiscal stimulus.
The extra spending, he added, should be for a smaller period and must be backed by policy measures like exchange rate flexibility.
Referring to the Indian growth story and future prospects, he said: "India's economic engine will run smoothly and there is no reason why the country should not remain a lucrative investment option for the rest of the world."
The IMF chief further added India's economic growth rate of 8.2 to 8.3 per cent was "not that bad".