IMF cuts euro zone 2014 growth forecast

Monday 14 July 2014 16.59
The IMF has cut its 2014 growth forecast for the euro zone to 1%.
The IMF has cut its 2014 growth forecast for the euro zone to 1%.

The IMF has cut its 2014 growth forecast for the euro zone, warning that the recovery in the single currency bloc was "neither robust nor sufficiently strong."

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

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

The Washington-based IMF recommended euro zone 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.