Warning for the West as crisis spills onto streets

There are also worries about larger economies such as Slovakia, Bulgaria, Romania and Ukraine. If they weaken further, it will put banks in Germany and Austria in even deeper trouble. Austrian banks have run up huge debts in neighbouring countries.

Last month saw the biggest demonstrations in Latvia and Lithuania for nearly 20 years. In Vilnius, the capital of Lithuania, a mass protest against austerity measures ended up in a riot as protesters hurled eggs, rocks and snowballs at the police.

In Latvia's capital Riga, people dug up cobblestones from the street, smashed storefronts and trashed police cars. The protests followed the government's decision to push through massive cuts in social security payments.

Angry demonstrations have broken out elsewhere in Eastern Europe. The centre of the Bulgarian capital Sofia was brought to a standstill by protesters who surrounded the country's parliament building.

In Romania, thousands of workers walked out of factories and marched against government plans for more privatisation and budget cuts.

Tension is rising in Hungary, where unemployment has jumped to above 8%, according to analysts in Budapest. Last year, the government was forced to turn to the International Monetary Fund to avert a debt default, and the economy is forecast to contract as much as 3% this year.

Meanwhile, some of the strongest emerging economies outside of Europe are also in trouble. Taiwan said last week that exports in January plunged a record 44% from the same month last year, pushing them down to a level unseen since 2005.

Last week, Brazil posted industrial production numbers for December that showed a historic tumble of 12.4% from the previous month, shocking the country and forcing its president to calm nerves.

In South Korea, the December fall in industrial output over a year earlier was the largest since the country began keeping records. The South Korean won has shed nearly 10% of its value against the dollar.

Malaysia announced last week that its factory output fell at its steepest pace in 15 years in December from a year ago, reinforcing expectations the government will step up spending to fend off a recession.

It was the fourth straight month of decline in output in the South-east Asian country, which is grappling with collapsing demand for electronic goods, the biggest export revenue earner for the country.

"The magnitude of the deterioration (in emerging economies) is nothing short of dramatic," said Amer Bisat, an analyst at US investment firm Traxis Partners. "We're continually catching up with the data, and with continuing downward revisions, at a pace which to my mind is unprecedented."

Bleak economic figures have prevented some stock markets in developing countries from making gains this year. Benchmark indices in Brazil and China are up about 10% this year, but India's is down slightly and Russia's has fallen sharply. The Russian equity market is one of the worst-performing bourses in the world.

Analysts said a number of emerging markets are grappling with a series of blows such as declining trade, shrinking capital flows and slumping commodity prices. Domestic demand also is going into reverse.

JP Morgan forecasts that at least 11 emerging economies - among them South Korea, Taiwan, Russia, Turkey, and Mexico - will shrink in 2009, with another four posting no growth.

Brazil is the latest example of the swift reversal of fortune in emerging markets. Just last month, the country's finance minister predicted "good economic results" and gross domestic product growth of 4% in 2009 for South America's largest economy. But forecasts by private economists are in freefall, and many now predict no growth or very little this year.

JP Morgan economists predict that China, the giant of the emerging world, will grow 7.2% this year, a major deceleration compared to 2008 and 2007. Chinese imports and exports are falling at their worst rates in a decade, a sign not only of weak global demand, but of a retrenchment by Chinese companies and consumers.

The Chinese government has responded with an aggressive stimulus package and interest-rate cuts. A gauge of manufacturing posted a slight rebound for January, but is still signaling a contraction in activity.

In South Korea, the economy began spinning backwards late last year. Surging exports from its ports stalled and then fell more than 30% in January over a year earlier, a reversal that has outpaced declines the country experienced during the Asian financial crisis of 1997-98.

In 2009, Taiwan, Indonesia, and the Philippines are expected to see a fall in exports that will outstrip what they experienced during the Asian financial crisis of 1998, according to Credit Suisse.

During that debacle, emerging nations were able to recover relatively quickly by relying on export markets like the United States to keep buying their goods - something they may not be able to count on this time around.