BRUSSELS: The IMF on Tuesday said the eurozone economic recovery was bro­ad and strengthening, but warned that low inflation, fragile banks and Bre­xit remained significant risks.

“The recovery is firming, with growth and job creation returning in many cou­ntries that went through sev­­ere downturns,” the Int­e­­­r­national Monetary Fu­nd’s executive board said in its annual report on the 19-nation single currency bloc. However, all was not rosy, with an improving outlook in the short-term “clou­ded by significant downside risks,” it warned.

These required “decisive actions” by governments, including the adoption of tough reforms and, in certain cases, extra public spending on growth friendly projects and investments.

Given the persistent challenges, monetary policy at the European Central Bank “should remain firmly acco­mmodative until there is a sustained rise in the inflation path” toward the ECB’s objective of just below 2.0 percent. This effort should not let up even if certain countries, such as Germany, saw inflation reach target level well before others, the IMF added.

Published in Dawn, July 26th, 2017