IMF warns euro zone to shrink 4.2 percent this year, more action needed to support E. Europe

IMF says euro zone to shrink 4.2 percent this year

LONDON — The International Monetary Fund is warning that the countries using the euro currency will see their economies shrink 4.2 percent this year.

It says next year will be tough as well but that the economy should start bouncing back sometime in 2010.

The IMF also issued a warning that the European Union needs to put in place more assistance for its neighbors in Eastern Europe to avoid a financial collapse in any one country that could hurt other countries.

The predictions are contained in the organization’s World Economic Outlook released on Wednesday.