Threat of recession: Euro zone under pressure over stalling growth

WASHINGTON:

The world’s economic policy elite kept up pressure on the euro zone on Friday to fight off stagnation, with Germany under the gun to support more spending to spark growth.

But Berlin continued to fend off the pressure to allow a loosening of budget constraints across the struggling euro area, saying it would be “foolish” to sacrifice the gains made in improving government finances.

Finance ministers and central bank chiefs from around the world, in Washington for the annual meetings of the International Monetary Fund and World Bank, voiced strong worries that the eurozone economy was stalling and on the edge of a new recession.

Underscoring their concern, markets continued to plummet. European shares, measured by the Euro Stoxx 50 index, fell 1.4% on Friday for a loss of 3.7% over a week. Wall Street’s S&P 500 index sank 2.1% on Friday, for a 3.1% weekly loss.

“The European economy, especially the euro zone, is facing stronger headwinds than we had expected during our spring meetings,” said Poul Thomsen, head of the IMF’s European department.

Published in The Express Tribune, October 12^th, 2014.

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