Europe risks relegation to 2nd division: IMF

09:00, April 01, 2010      

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The lingering unemployment rate and rising inflation reflected in consecutive data released Wednesday further highlight the concerns over the EU's possible lagging behind other regions economically.

Europe is in danger of being relegated to the second division of world economic powers, while the United States and Asia bounce out of the global downturn, the head of the IMF warned.

"There is a probability that, if Europeans do not act swiftly, in 10 or 20 years' time the fight will be between the US and Asia, while Europe will be left aside," International Monetary Fund chief Dominique Strauss- Kahn said Tuesday in an address to students in Bucharest during a brief visit to Romania.

Strauss-Kahn said that although the economic situation was better than a year ago, Europe's rebound was still slow.

His comments came as the IMF slashed its forecast for growth in Germany - Europe's biggest economy - to 1.2 percent this year, down from a projection of 1.5 percent, warning that recovery would be "moderate and fragile."

Unemployment in the 16-nation eurozone hit a record 10 percent in February, official figures showed Wednesday, as the jobless rate of the 27-nation European Union as a whole in February stood at 9.6 percent, slightly up from 9.5 percent in February.

Meanwhile, Eurostat announced an unexpectedly swift rise in the eurozone annual inflation rate, up to 1.5 percent in March, a 15-month high and well above the 0.9 percent recorded in February.

"It is likely that energy- and food-related base effects have played a key role in pushing up inflation," said CIB BNP-Paribas economist Clemente De Lucia.

Source: Global Times


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