Summary Box: IMF warns EU banks to cut lending

AP News

4/18/2012 4:28:32 PM - AP News

BANKS CUTTING BACK: The IMF warned Wednesday that European banks trying to preserve capital could cut back sharply on lending over the next two years, slowing the region's growth. Credit could shrink by 1.7 percent by the end of 2013.

WORST-CASE SCENARIO: But the slowdown could be worse if European governments don't follow through on pledges to cut budget deficits and build up their bailout fund. That would leave the eurozone economy 1.4 percent smaller than forecast.

BEST-CASE: Conversely, if European policymakers restructured or closed down weak banks and took other steps, the eurozone economy would perform better than forecast.