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OECD: euro collapse would have 'highly devastating outcomes' worldwide

David Gow The Guardian 11/30/2011 00:56
OECD Chief Economist Pier Carlo Padoan

OECD Chief Economist Pier Carlo Padoan


The collapse of the euro could send the world's advanced economies into a severe recession, dragging emerging markets with them into the mire, the Organisation for Economic Co-operation and Development warned on Monday.



The Paris-based thinktank slashed its forecast for growth among its 34 members from 2.3% half a year ago to 1.6%, with Europe dramatically downgraded from 2% to just 0.2% because of the unresolved sovereign debt crisis.

Pier Carlo Padoan, OECD chief economist, made plain in the body's latest six-monthly economic outlook that the greatest threat to global economic health comes from the eurozone rather than from the tax-and-spend gridlock in the US Congress.

In his introduction to the report he said: "Recent contagion to countries thought to have relatively solid public finances could massively escalate economic disruption if not addressed."

In a devastating critique of eurozone leaders' hesitancy and dilatoriness, he said: "The scenario so far is that Europe's leaders have been behind the curve. We believe this could be very serious."

His comments came amidst evidence that the 17 eurozone countries are even wider apart on the measures required to staunch the exit of global investors and prevent a credit crunch on an even worse scale than in 2008-09.


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