IMF warns Europe to 'mind jobs and growth'

Earlier this month, the Fund raised its growth outlook for the euro area to 1.7 percent in 2010 and 1.5 percent in 2011, and it said in the outlook inflation would remain low at 1.6 percent and 1.5 percent, respectively.

It said there were still risks, including the possibilities of weaker than predicted global growth as well as renewed volatility on European markets.

In its Regional Economic Outlook for Europe, the IMF said developments in the continent's emerging East would depend on the richer West, where renewed instability could hit trade and capital flows, hurting already weak domestic demand.

Advanced Europe would continue to lag more dynamic economies in Asia and the Americas in part due to the impact of the crisis and the struggle by governments from Britain to the Baltics to rein in budget deficits.

"More than ever... the recovery depends on policymakers getting it just right," the Fund said.

"Fiscal consolidation, while inevitable, should be undertaken in a way that minimizes the negative impact on growth and unemployment; if growth threatens to slow appreciably more than we expect, countries with fiscal room could postpone some of the planned consolidation."