Calm volatile financial markets, Chidambaram tells rich nations

"We urge the advanced economies to take appropriate measures to restore full normalcy in financial markets," finance minister P Chidambaram said at the joint meeting of the World Bank and the International Monetary Fund.

Chidambaram last week said that while the developed countries had injected considerable amount of liquidity into their markets, part of the liquidity had spilled over into India and some other countries.

He said the injection of funds have increased downside risks and the turbulance is spreading across financial markets. The prospects for 2008 are somewhat uncertain as risks continue to unfold, he added.

He said global imbalances, supply-side inflationary pressures like oil prices and protectionism continue to pose risks to growth.

While China and India continue to remain the engines of global growth and the world GDP growth is projected to cross 5 per cent this year, he said, supply-side inflationary pressures and protectionism continue to pose risks to growth.

IMF managing director Rodrigo Rato also warned that an ''earthquake'' in credit markets sparked by rising defaults in the US mortgage market could tip the global economy into recession.