IMF cuts eurozone 2014 growth forecast

July 14, 2014 - 6:56:30 pm

BRUSSELS: The IMF cut its 2014 growth forecast for the eurozone on Monday, warning that the recovery in the single currency bloc was "neither robust nor sufficiently strong."

In an annual report on the eurozone, the International Monetary Fund said growth this year would reach 1.0 percent instead of the 1.1 percent earlier forecast. The estimate for 2015 remained at 1.5 percent.

"We acknowledge there is recovery but a lot more needs to be done," said Mahmood Pradhan, Deputy Director of the IMF's European Department, in a conference call presenting the report.

The Washington-based IMF recommended eurozone policy-makers adopt measures to boost demand, reinforce banks, and pursue structural reforms that applied to all 18-member countries, including ways to fight youth unemployment.

The IMF praised monetary measures decided in June by the European Central Bank, which included negative interest rates and fresh financing for lenders, and said proof of their effectiveness could take time.

If the measures fall short however, the IMF urged even more stimulus, including so called quantitative easing embraced by the United States, Britain and Japan, but so far resisted by the more conservative ECB.

The IMF also urged reforms to help businesses replace their dependency on banks for credit with the use of bonds and other methods of raising fresh funds. (AFP)

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