The International Monetary Fund has reversed it previous outlook for the eurozone, saying the 17-member bloc will not be able to leave recession behind this year. It said economic activity is still far too low.
The International Monetary Fund (IMF) said on Wednesday the bloc of 17 eurozone nations as a whole would not be able to wriggle out of recession in the course of 2013, predicting a 0.2 percent contraction in the single currency area this year.
It thus revised down its previous October 2012 economic outlook when it expected the eurozone to grow by 0.2 percent.
"Risks of prolonged stagnation in the euro area as a whole will rise, if the momentum for reform is not maintained," the report said. The IMF urged all eurozone nations struggling with large budget deficits to continue to push through both fiscal and structural reforms.
Call for solidarity
The Washington-based lender said in its outlook update that the weaker economies in the bloc must be supported through the EU's firewalls along with continued steps towards full banking union and budget integration. The IMF said it predicted the eurozone to post modest 1 percent growth in 2014.
It expected the global economy to expand by 3.5 percent this year, with emerging economies again being the main drivers of growth. According to IMF estimates, China would see around 8 percent growth, while India would be likely to log 5.9 percent, up from 4.5 percent last year.
The report also contained positive news for Japan. The East Asian country is expected to quickly escape its recent downturn and experience a 1.2 percent expansion of its economy in 2013, which comes on the back of slashed interest rates and a large stimulus package.
hg/dr (AFP, dpa)