Eurozone finance chiefs warned on Friday that the 15-nation bloc faced growing risks to economic growth and inflation, but insisted there was currently no threat of a recession. EU Economic and Monetary Affairs Commissioner Joaquin Almunia also acknowledged that “downside risks have increased” since he forecast in February that the eurozone economy would grow 1.8 percent this year.

Nevertheless, Almunia said eurozone finance ministers expected a “better scenario” than the International Monetary Fund’s recently reduced forecast for 1.3 percent growth this year in the bloc. Eurozone finance ministers, who were to be joined later by counterparts from all EU countries for a two-day meeting, are struggling to come up with concrete responses to the growing threats hovering over their economy.

Though under pressure to try to counter the financial crisis, deep divisions on the best strategy have so far kept the European finance ministers from taking concerted action. Huge new write-downs this week by Swiss bank UBS and Deutsche Bank of Germany added to the sense of urgency ahead of the meeting of EU finance ministers and central bankers in Slovenia, which currently holds the EU’s rotating presidency.

While the outlook for economic growth was falling, Almunia said inflation was rising and would probably top the 2.6 percent he forecast for 2008 in February.  Although eurozone finance ministers were “concerned” but not “on the pessimistic side” regarding economic growth, Almunia said “we are extremely concerned on the inflation side.”

Inflation in the 15 eurozone countries jumped in March to 3.5 percent — the highest level since the bloc was formed in 1999, according to official EU data earlier this week. For those investing in this part of the world, care and a close-eye are in order.