The European economy is expected to grow at a rate of 2.4 percent in 2011, as against 2 percent predicted in the regular spring forecast, the IMF said. The growth projection for 2012 has been changed as well, from 2.2 percent to 2.6 percent.

As for emerging European market economies, which along with Turkey, Poland, Romania, Hungary, Bulgaria, Serbia, Lithuania and Latvia also include Croatia, the IMF expects an economic growth of 4.3 percent both in 2011 and 2012.

In the IMF regular spring forecast, the growth projection for this region for 2011 was 3.7 percent and for 2012 it was 4 percent.

Croatia's economy is expected to grow at a rate of 1.3 percent this year, and at 1.8 percent in 2012, which is in line with the spring forecast.

Growth forecasts for advanced European economies, which along with 17 members of the euro zone also include Great Britain, Sweden, Switzerland, the Czech Republic, Norway, Denmark and Iceland, have been confirmed at 1.7 percent in 2011 and 1.9 percent in 2012.

The main challenges for advanced European economies are the restoration of confidence, including structural reforms, fiscal consolidation and strengthening of the financial systems, notably those on the margins of the euro area.

As for emerging European markets, the IMF believes they should focus on protecting their solid economic growth from risks such as the acceleration of inflation and the spilling over of financial tensions from the euro area.

Both regions should also pay attention to underpinning their financial systems, and Europe's emerging market economies should encourage healthy lending, which is currently jeopardised by a high share of non-performing loans and the reluctance of foreign parent banks to step up the flow of capital to their local subsidiaries, the IMF says.