"I am a little bit concerned that after instances of excessive pessimism we are possibly now in a phase...of irrational euphoria, of premature euphoria," Camdessus told a news conference. Camdessus said Asia had passed the worst and the region's stock markets seemed to be anticipating economic recovery.

He said the IMF now expected the South Korean economy to grow up to four percent this year and positive growth was possible in Thailand, the Philippines, Malaysia and even Indonesia.

"For this recovery to be sustainable, it will have to be supported by the continuation of the structural reforms the countries have committed to implement," Camdessus said. "If you take the market data, the markets consider thesemeasures, these reforms are already taken and everything is OK."