WASHINGTON, July 12: The IMF said on Friday euro zone economic growth may be weaker than had been expected in 2002 as it takes a hit from sliding stock markets.

“Overall, absent a stronger global recovery, recent developments suggest that growth in 2002 may be somewhat weaker than expected,” said a statement issued by an International Monetary Fund economic mission.

“Moreover, uncertainty and downside risks have increased looking forward,” it said.

“However, barring significantly more pronounced shocks than have seen so far, the basic prospect would seem to remain one of an upswing back to potential growth.”

The Fund said it had expected the zone’s growth, helped by a boost in exports, to exceed its long-term potential during the second half of 2002 before settling down in 2003.

But short-term indicators suggested the recovery was off to a soft start and there was little evidence so far of the expected prompt turnaround in domestic demand, it said.

Two other key factors — stocks and the euro — had disrupted the recovery picture, the report said.

Global equity markets had sold off sharply.—AFP