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Euro area growth to slow sharply; debt crisis key: OECD

Euro area growth to slow sharply; debt crisis key: OECD
On Monday October 31, 2011, 6:18 am

PARIS (Reuters) – The euro area is headed toward a sharp economic slowdown in 2012, with some countries set for negative growth, and failure to restore confidence in battered state finances could prompt a major contraction in developed countries, the OECD said on Monday.

In a report released just days before a summit of G20 leaders in Cannes on November 3 and 4, the Organisation for Economic Cooperation and Development slashed its 2012 growth forecast for the euro area to 0.3 percent from 2.0 percent in May.

It also cut its growth estimate for the United States to 1.8 percent from 3.1 percent, and warned of major downside risks to the global outlook if leaders fail in their bid to stop the sovereign debt crisis from rattling financial markets.

“A deterioration of financial conditions of the magnitude observed during the (2007-2009) global crisis could lead to a drop in the level of GDP in some of the major OECD economies of up to 5 percent by the first half of 2013,” the Paris-based organization said in its report.

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