国际英语新闻：IMF says fiscal consolidation "inevitable" for advanced European economies

WASHINGTON, Oct. 20 (Xinhua) -- Fiscal consolidation remained inevitable for Europe's advanced economies but needed to be implemented carefully as the region continued fight its way out of the deepest post-war recession, the International Monetary Fund (IMF) said Wednesday.

In its latest Regional Economic Outlook (REO) for Europe, the IMF said the recovery had been boosted by the resurgence of the world economy, with export growth especially strong in countries that export capital goods. However, the recovery was sluggish and projected growth rates were low by historical standards.

The IMF projected that gross domestic product (GDP) in Europe would expand by 2.3 percent in 2010 and 2.2 percent in 2011, after a 4.6 percent contraction in 2009.

In advanced Europe, where policy actions helped contain sovereign debt troubles in early 2010, growth was projected at just 1.7 percent in 2010 and 1.6 percent in 2011.

"Despite recent strength, however, the upswing is projected to remain weak compared with previous recoveries and also with advanced economies in other regions," the IMF said. "In part, these growth differentials are due to the lingering impact of the crisis and the accelerating fiscal adjustment in 2011."

They also reflected well-known structural rigidities in the labor, product, and services markets that would limit the euro area's potential growth, it said.

The IMF also noted that significant risks remained, and urged policymakers to implement appropriate policies.

"Fiscal consolidation, while inevitable, should be undertaken in a way that minimizes the negative impact on growth and unemployment; if growth threatens to slow appreciably more than we expect, countries with fiscal room could postpone some of the planned consolidation," the report said.

Monetary policy must steer carefully between the need to normalize policies on the one hand and the necessity to mitigate sovereign market volatility and ensure bank liquidity on the other; and the recent checkup of European banks should be followed by rapid action to eliminate remaining weaknesses in balance sheets while continuing to safeguard lending capacity.

"Policymakers need to focus on strengthening bank balance sheets," said Ajai Chopra, Acting Director of the IMF's European Department. "Vulnerable financial institutions should be restructured, recapitalized, or resolved without delay."