He also said that India-Brazil-South Africa (IBSA), three leading emerging economies, were united in their efforts to address the deficit in global governance and pressed for enlargement of the UN Security Council to reflect the present day reality.
"The sovereign debt crisis in Europe and recessionary trends in the traditional engines of the global economy - the US, Europe and Japan-- are sending negative signals to world financial and capital markets which are showing signs of distress," Dr Singh said addressing the plenary session of the IBSA Summit in Pretoria.
"Developing countries cannot remain untouched by the negative impacts of these developments. Their ability to address their developmental challenges has been adversely affected," he said.
"We hope effective and early steps will be taken by Europe and other advanced economies to calm the capital and financial markets and prevent the global economy from slipping into a double-dip recession," Dr Singh added.
With G-20 summit in the offing in Cannes early next month, Dr Singh said IBSA countries should cooridnate their positions in the run-up to it to ensure that priorities of the developing economies are adequately reflected in the deliberations of the grouping.
The economic and financial crisis being witnessed in the West was one of the main issues of discussion at the 5th IBSA summit along with reform of the international institutions of governance and the UN.
"We stand united in our efforts to address the deficit in global governance. The United Nations Security Council must be enlarged in order to reflect present day reality and to make it representative and effective in responding to global challenges," Dr. Singh said.
Noting the special salience of the fact that IBSA countries were at the same time non-permanent members of the UNSC, Dr. Singh said the three nations had demonstrated their "cohesion and coordination" on various issues under discussion in the UN, particularly in the context of the developments in West Asia and North Africa.
The visit of an IBSA delegation to Damascus in August this year and their interaction with the Syrian leadership demonstrated the political role which IBSA can usefully play, Singh said, adding "we should build upon this experience."
Talking about the synergies in the three countries, he said despite the global economic slowdown, the three economies have registered a steady growth rate with intra-IBSA trade almost touching the 20 billion dollar mark.
"This augurs well for realising our target of 25 billion US dollar by 2015, and for being even more ambitious," Dr. Singh said.
The Prime Minister described IBSA Trust Fund, to which each country of the grouping contributes USD one million, as a novel initiative through which IBSA countries have been able to share developmental experience with other developing nations in the true spirit of SouthSouth cooperation.
"We should strengthen IBSA's ownership of the projects executed under the Trust Fund and bring their focus back to what was originally envisaged i.e. hunger and poverty alleviation," he said.
"We could consider new projects in areas such as agriculture and agro-processing, environment and energy, including new energy resources. These will help our partner countries in addressing the challenges of food and energy security," he said.
The IBSA Trust Fund projects could also usefully focus on education and skill development, which is a key requirement of almost all developing countries, Dr. Singh said.
The early conclusion of India-SACU-Mercosur Trilateral Trade Arrangement would give a boost to South-South trade and Africa could emerge as a bridge linking South Asia and Latin America, he said.
Underscoring the significance of the IBSA cooperation on environment and climate change issues, Dr. Singh said the BASIC Group comprising Brazil, South Africa, India and China has proved to be an effective forum for projecting the viewpoint of the developing world.
"We should maintain the momentum of coordination and consultation in the run up to Durban" climate meet from 28thNovember to 9th December, he said.
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