Europe's economies are growing solidly but governments must not forget the long-term challenges of raising growth potential and cutting high unemployment, IMF Managing Director Rodrigo Rato said in an interview today.
Mr Rato also warned Europe against protectionism and said all countries, particularly the large ones, must do their bit to bring the Doha trade talks to a successful conclusion.
"The European economies are solid but the continent must not lose sight of the challenges that await it over the long-term," he told France's Le Figaronewspaper.
"The most fundamental is the weak growth rate of potential output, high unemployment, a weak labour participation rate and the risk that protectionism will reappear."
Population ageing will accelerate in Europe after 2010, presenting another challenge over the long-term, the International Monetary Fund chief said.
Europe has made progress on economic integration, Rato said, but its leaders need to step up their efforts in this area.
"Europe has reacted well to competition, as witnessed by the relatively solid performance of the manufacturing sectors. Now it must extend this competition to other sectors, notably in services and financial markets," he said.