RTTNews - Thursday, Executive Directors of the International Monetary Fund said the euro area is in recession, amid some tentative signs of improvement. Directors expect the decline in economic activity to moderate through the rest of the year and to give way to a modest recovery next year. The executive board however, underscored the considerable uncertainty surrounding the scenario.

The Washington-based fund estimates the Eurozone economy to shrink 4.8% in 2009 before shrinking 0.3% next year.

According to directors, a resolute and well-coordinated approach to relieve financial stress is essential for a durable recovery. They welcomed the intention of national authorities to thoroughly assess the financial position of banks. Such an assessment should be accompanied by comprehensive follow-up action involving suitable disclosure, recapitalization, measures to address the problem of impaired assets, and resolution of unviable financial institutions, report said.

Marek Belka, director of the IMF's European department reportedly said more needs to done to clean the banks.

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