The global credit crunch is still going strong and shows little sign of easing up, the International Monetary Fund (IMF) has warned.

The organisation said that banks were being particularly hard hit and their reluctance to lend was worsening the situation.

Emerging markets such as China and India were also likely to suffer more in the months ahead, it added, as businesses put off non-essential investment.

Companies, individuals and governments were all likely to feel the squeeze, the report said, while the crisis surrounding US mortgage lenders Fannie Mae and Freddie Mac was of particular cause for concern.