Europe's economic recovery outlook faces increased uncertainty, the IMF said today, cautioning that Greece's crippling debt crisis, continuing banking woes and shaky company and household balance sheets could slow the region's rebound, AP reported. The International Monetary Fund put the pace of recovery for the countries that use euro at 1 percent for 2010, far lower than the 3 percent in the United States and 6.9 percent in Asia. «The uncertainty around the outlook in Europe has increased» since the last World Economic Outlook issued in October, the international lender said. The IMF said that «sizable fiscal and current account imbalances are constraining recovery in several euro area countries, with potentially negative spillover effects to the rest of Europe.» «Indeed, concerns about sovereign solvency and liquidity in Greece (and possible contagion effects on other vulnerable euro area countries) have threatened the normalization in financial market conditions,» the IMF said. Greece, which is struggling to cope with ¤300 billion ($406 billion) in debts, needs to borrow about euro54 billion this year. Its economic growth is projected to contract by 2.2 percent, according to the IMF, while its public debt is seen at more than 120 percent of its gross domestic product through next year. On Wednesday, it began talks with the IMF, the European Commission and the European Central Bank to deal with its financial crisis. The country's debt woes have stoked fears that it could spill over across the region, hammering the nascent recovery under way as the region and world struggle to emerge from under the weight of the worst financial meltdown since the Great Depression over 70 years ago. The organization said that other issues, such as weak corporate and household balance sheets and the deleveraging of the financial sector have also affected the speed of recovery in the hardest-hit emerging market economies in Europe. The recovery in advanced euro zone countries like Germany and France is expected to be moderate, because of limited export growth, investments and credit constraints, the IMF said. But even slower will be the recovery in smaller euro zone economies like Greece, Ireland, Portugal and Spain where growth is pressured by troubled government finances. Germany, the euro zone's largest economy, was projected to see growth of 1.2 percent, an improvement from the 5 percent contraction in 2009. France's economy was seen growing at 1.5 percent, up from a contraction of 2.2 percent last year while Italy was rebounding from a 5 percent contraction to a very slight 0.8 percent growth rate. -- SPA
