Eurozone in the slow lane

OECD Chief Economist Pier Carlo Padoan said Wednesday he saw the global economy moving forward, but added the recovery was still disappointing and taking place "at multiple speeds."

In its latest global outlook, the Paris-based Organisation for Economic Co-operation and Development (OECD) feared that the protracted weakness in Europe could evolve into stagnation with negative implications for the global economy.

The OECD again slashed its forecast for the 17-member euro area, saying it would shrink by 0.6 percent this year, down from its previous prediction of a 0.1-percent decline in 2013.

Winning back confidence

"Eurozone policymakers have often been behind the curve and the whole continent is still beset by weakly capitalized banks, public debt financing requirements and exit risks," the organization wrote in its report.

It also said that unemployment in the eurozone was likely to rise further from the current 12.1-percent rate to stabilize at a very high level only in 2014. It noted that Europe's young people were especially suffering, with unemployment of around 50 percent in some of the hardest-hit euro area nations such as Greece and Spain.

OECD officials urged European governments to do more to support economic recovery. It praised the European Central Bank (ECB) for its loose monetary policy, but demanded more non-conventional measures to spur growth and enhance stability by pushing ahead with the planned Europe-wide banking union.

hg/kms (AFP, dpa)