Europe need to take comprehensive
and bold policy action to restore fiscal health, address remaining weaknesses in
the financial sector, and implement reforms to restore competitiveness and
growth, the International Monetary Fund (IMF) said on Thursday.

The economic outlook in the European
region “is expected to solidify,” but fiscal challenge remain tough, according
to a statement released by the Washington-based international lender.

“In advanced Europe, policy makers need
to take steps to restore confidence — structural reforms, fiscal consolidation,
and strengthening of the financial system, most notably in the euro area
periphery,” said Antonio Borges, Director of the European Department of the IMF.
“Emerging Europe has so far proved resilient to spillovers from the euro area
periphery, but it will need to continue reducing its fiscal and financial
vulnerabilities and reorient growth towards the tradable sector.”

In the latest Regional Economic Outlook
(REO) for Europe: Strengthening the Recovery, the IMF sees growth for all of
Europe at 2.4 and 2.6 percent for 2011 and 2012, respectively, after 2.4 percent
last year.

The IMF projects growth in advanced
Europe to expand by 1.7 and 1.9 percent this year and next, compared with 1.7
percent in 2010. Growth in emerging Europe is expected to be stronger, at 4.3
percent in 2011 and 2012, after 4.2 percent in 2010, with all countries posting
growth for the first time since the 20082009 crisis.

The IMF noted that to prevent new
crises, more vigilance is called for, better institutions to deal with financial
sector problems must be developed, and more, rather than less financial and
economic integration is needed.

The main risk to the outlook for Europe
arises from tensions in the euro area periphery. Other global worries also pose
risks, but concerns about overheating in the continent’s emerging economies are
more muted than in other regions.

The IMF also warned that stepping back
from financial integration would be wrong. It suggested that to prevent the next
crisis, more vigilance is needed, both nationally and across borders, together
with better pan-European institutions to deal with financial sector problems,
and, correspondingly more, rather than less financial integration.

VietNamNet/Xinhuanet