ISLAMABAD - The International Monetary Fund (IMF) has called for determined action towards establishing banking and fiscal unions in the euro area to bolster monetary union. The euro area crisis has reached a critical stage, as financial markets in parts of the region face acute stress, said IMF in its latest assessment of economic developments in the eurozone. GDP growth in the euro area is expected to come in at -0.3 percent in 2012 and 0.9 percent in 2013.
The pace of fiscal adjustment is particularly fast in the hard-hit periphery countries, and this is weighing on the growth outlook. Projected consolidation for 2012-13 ranges from more than 4 percentage points of GDP in Cyprus, Portugal, Greece, and Spain, to 0.5 percentage points or less in Germany, Austria, Finland and Luxembourg. The rate of unemployment is expected to continue to vary widely across the region—from 5 percent in Germany to about 24 percent in Spain this year.