The euro zone must take coordinated action to revive economic growth, the International Monetary Fund (IMF) said last night in a strongly worded statement that cited the need to repair bank balance sheets, advance a banking union and support demand.

“Growth remains weak and unemployment is at a record high. Concerted policy actions to restore financial sector health and complete the banking union are essential,” the IMF said in a regular assessment of the currency bloc’s economy.

“The centrifugal forces across the euro area remain serious and are pulling down growth everywhere,” it said in a statement.

The euro zone economy has been battered by a severe sovereign debt crisis that has required massive bailouts of several of its smaller members, with Greece securing a €6.8 billion lifeline yesterday.

The IMF said the threat to the survival of the single currency evident 12 months ago had been beaten back by the European Central Bank, which announced it could intervene directly to stabilise bond markets, as well as other steps.

But it viewed this progress as insufficient to declare the crisis over, and urged euro zone leaders to stay focused on the urgent need to combat record-high unemployment, which risks the long-term economic and political health of the entire region.

“Reviving growth and employment is imperative. This requires actions on multiple fronts .... A piecemeal approach, on the other hand, could further undermine confidence and leave the euro area vulnerable to renewed stress.”

Reuters