Europe presents main threat to global recovery, IMF says

Washington Post
July 8, 2010

Europe's weakened economy is now the central threat to global recovery, as its countries struggle with heavy debt, banks face a reckoning over their lack of capital and growth is slowing, the International Monetary Fund said Wednesday in its first assessment of the world economy since a crisis over government borrowing in Greece.

While the agency estimated that growth in the United States and emerging Asian and Latin American countries remains on track, it scaled back projections for Europe and outlined a series of issues there that could -- unless controlled -- spark problems rivaling those that caused the 2008 collapse of Lehman Bros.

"Downside risks have risen sharply" in recent months, the IMF said. "The ultimate effect could be substantially lower global demand."

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