IMF warns eurozone recovery remains highly challenging | Business| Economy and finance news from a German perspective | DW | 25.07.2013
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IMF warns eurozone recovery remains highly challenging

The International Monetary Fund has maintained that the euro area's process of recovery from its protracted debt crisis is still rather slow and patchy. It urged governments to push ahead with required reforms.

IMF officials said Thursday a sustainable recovery in the 17-member eurozone required faster action by governments across the bloc to fix the still wobbly banking sector and help the flow of credits especially for small and medium-sized companies.

"We worry that the economic recovery across the euro area remains elusive, and this weakness is now not only in the periphery, but also in the core countries," IMF Deputy Director in the European Department, Mahmood Pradhan, told reporters on a conference call.

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While praising the bloc's recent efforts towards forming a banking union, improving its bailout fund as well as its oversight of national budgets, the IMF assessment contained concerns that the reform momentum might fizzle as the economic situation improved.

Protectionism targeted

Pradhan said he was particularly worried about rising unemployment especially among young people in the bloc which had increased the risk of stagnation and social tensions and spillovers to the global economy.

He said IMF leaders generally considered it necessary for the European central bank to continue its loose monetary policy, including further cuts in already record-low interest rates.

The crisis lender pointed to the benefits of opening the services market across the European Union which would "remove barriers to protected professions, promote cross-border competition and raise productivity."

hg/dr (dpa, Reuters)

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