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The report comes a week after IMF chief Christine Lagarde said she was hopeful about Europe’s prospects.
Speaking at the World Economic Forum in Davos, Switzerland, on January 26, Lagarde described Europe’s recovery as “fragile”
But the report says that some of the fundamental issues that led to a eurozone crisis remain unresolved and that in some European countries, conditions are getting worse.
The Bloomberg report, published on Thursday, cautioned that Europe had still not overcome its greatest financial challenges.
On Friday, French officials said they would cut by about half their 2013 economic growth forecast.
The French revision from 0.8 to about 0.4 per cent growth echoes forecasts previously made by the IMF.
In its revised World Economic Outlook, the IMF said that while the global economy would grow 3.5 per cent, the 17-nation eurozone would contract by 0.2 percent.
Initial forecasts had the eurozone growing by 0.2 per cent.
European economic powerhouse, Germany, revised its growth figures from 1 per cent to 0.4 per cent.
In a video released with the World Economic Outlook report, IMF Chief Economist Olivier Blanchard gave a mixed view of where Europe currently stands.
“In particular, the growth numbers are not enough to make a dent to the unemployment rate in advanced economies,” Olivier said.
Earlier in January, the European Commission’s office for Employment, Social Affairs and Inclusion released a report that indicated unemployment in some countries has reached record levels with nearly 19 million people jobless in the eurozone.
Unemployment in Spain has reached 26.6 per cent, while in Greece jobless rates have increased from 19 to 26 per cent over the past year. The average unemployment rate for the eurozone rose to 11 per cent.
Based on the findings of the Employment and Social Developments in Europe Review, the report said that “household incomes have declined and the risk of poverty or exclusion is on the rise, especially in member states in southern and eastern Europe”.
“Prospects that dire call into question Europe’s political stability, and that puts recovery in doubt,” the Bloomberg report says.
With Inputs from Agencies