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The International Monetary Fund (IMF) has warned the credit crunch will continue and will soon start to affect commercial property.
It blamed banks and government for inadequate regulation and said losses were spreading to commercial property, consumer credit and company debt sectors.
Despite "unprecedented intervention by major central banks, financial markets remain under considerable strain, now compounded by a more worrisome macroeconomic environment", it revealed.
The IMF has predicted world growth will slow to 3.7 per cent in 2008 and emerging economies will be least affected.
The UK’s economy is projected to grow at only 1.6 per cent, markedly less than Russia (6.3 per cent) and the rapidly developing economies of India (8.0 per cent) and China (9.5 per cent).
It went on to reveal losses were spreading to commercial property after a period when the dangers of sub-prime losses were underestimated.