Europe’s Crisis Not Over, Faith in Euro Needed: IMF

The euro zone debt crisis still has a long way to go before it ends and Europe needs to keep faith in the single currency, International Monetary Fund deputy managing director Zhu Min said on Tuesday.

“Overall I would say the crisis is not over. We are still in the middle of it and there is some way to go,” Zhu told a World Economic Forum meeting in the Chinese port city of Tianjin.

“But it is moving in the right direction — that’s very important. We should have confidence, and we should have confidence in the euro,” he added.

Europe’s debt crisis has festered for more than three years, and investors widely expect the 17-member euro zone economy to slide into recession in 2012 as a result of the failure to solve the crisis and engineer a recovery.

A second European recession in three years would be bad news for the global economy, Zhu said.

“We should not underestimate the negative impact from the European crisis to the whole world. This is very important,” he told an audience of international business leaders gathered for an annual meeting in China.

“The growth side (of Europe’s crisis) has a profound impact on the global economy,” Zhu said, adding that IMF models predicted as much as 1.5-2.0 percent being cut from economic activity in the U.S. and Japan and 1 percent from activity in China if there was a further deterioration in Europe.

Via – CNBC

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.