News Summary: Eurozone warned of recession risk

Associated Press
A woman walks past a closed-down travel agency plastered with concert posters in Madrid Monday May 21, 2012.  Spain's economy minister de Guindos said the Spanish economy, which has contracted by 0.3 percent in each of the past two quarters, will shrink by about the same amount in the second quarter of 2012. The forecast is for it to decline 1.7 percent for the year. Unemployment stands at a staggering 24.4 percent, and exceeds 50 percent for people under age 25.(AP Photo/Paul White)
.

View photo

A woman walks past a closed-down travel agency plastered with concert posters in Madrid Monday May 21, 2012. Spain's economy minister de Guindos said the Spanish economy, which has contracted by 0.3 percent in each of the past two quarters, will shrink by about the same amount in the second quarter of 2012. The forecast is for it to decline 1.7 percent for the year. Unemployment stands at a staggering 24.4 percent, and exceeds 50 percent for people under age 25.(AP Photo/Paul White)

GRIM WARNING: The 17-country eurozone risks falling into a "severe recession," the Organization for Economic Cooperation and Development warned as it called on governments and Europe's central bank to keep the slowdown from dragging down the global economy.

THE FORECAST: OECD Chief Economist Pier Carlo Padoan warned the eurozone economy could contract by as much as 2 percent this year, a figure that the Paris-based organization had laid out as its worst-case scenario in November.

THE MEDICINE: Padoan called on eurozone leaders to adopt a "growth compact" to promote growth even while reducing deficits. New French President Francois Hollande has made securing such a pact the focus of his European diplomacy.

View Comments (0)