OECD warns of 'severe' risk in eurozone

22 May 2012, 6:29 pm   -   Source: AAP
(AAP)

(AAP)

EU is heading for international economic body's worst-case scenaria and should "act quickly" to stop its slowdown from spilling into the global economy.

The top economist at the Organisation for Economic Co-operation and Development (OECD) says the 17-country eurozone risks falling into a "severe recession".

OECD Chief Economist Pier Carlo Padoan says governments and Europe's central bank should act quickly to stop the slowdown from spilling into the global economy.

He says the eurozone is "close to" the possible scenario of a two per cent economic contraction this year that the Paris-based think tank laid out as its worst-case scenario last November.

Padoan's comments come as the OECD releases its twice-yearly global economic outlook on Tuesday.

The organisation now forecasts a longer and deeper contraction in the eurozone than in its November report, with the eurozone economy expected to shrink in 2012, and manage a minor recovery in 2013.

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