Heeding global calls for action to shore up Europe's sagging economy, euro zone's top finance official proposed a new growth pact on Friday to break a policy logjam and spur reforms by rewarding countries with cheap funds and leeway on budget targets.
The International Monetary Fund, which cut its global growth forecasts for the third time this year this week, flagged Europe's weakness as the top concern, a sentiment echoed by many policymakers, economists and investors.
European officials in Washington for the IMF and World Bank annual meetings sought to dispel the gloom, with European Central Bank President Mario Draghi talking about a delay, not an end, to the region's recovery.
Jeroen Dijsselbloem, the chairman of euro zone's finance ministers, used the forum to propose a new "growth deal" for Europe offering nations embarking on ambitious economic reforms more fiscal wiggle room and low-interest EU funds.
"There is no reason for this gloominess about Europe," Dijsselbloem told Reuters. "Those countries that have actually implemented the strategy and done the reforms, have returned to growth, in southern Europe, in the Baltics, in Ireland. Which once again proves that reforms do not hurt growth, but help recovery quite quickly."
It would take months of political negotiations for the proposed pact to take shape. In the meantime, a steady stream of poor economic data looks set to keep Europe's partners on edge.
"The biggest risk to the global economy at the moment ... is the risk of the euro zone falling back into recession and into crisis," British finance minister George Osborne told reporters.