In their most recent statement, the Organisation for Economic Cooperation and Development had dire warnings in regards to the current debt crisis in the eurozone. Spokesperson and chief economist of the OECD, Pier Carlo Padoan, stated that if the euro failed it would have grave worldwide consequences which could cause another recession of global proportions.
In their latest forecast, the OECD cut world growth to 1.6% down from 2.3% six months ago and Europe was downgraded dramatically to just 0.2% growth down from 2%, the previous forecast. The purpose for such a drastic move was the fact that there is still so much unresolved sovereign debt. Padoan stated that this contagion may escalate if not addressed immediately.
He further said that the leaders in Europe are falling behind the problem and that their hesitancy could create a very serious scenario which could impact nearby nations and then spread to global proportions. He feels that this debt crisis could result in a recession of greater impact even than the recent debt crisis of 2008-09.
Not only would countries like the United States and Japan feel the impact, but emerging economies would be taken down as well. In his words, there would be “highly devastating outcomes.” Padoan also noted that the contagion has already spread in the eurozone from weaker economies to nations thought to be the stable core.
Unemployment would run rampant worldwide and it would take serious action to halt the contagion. In fact, there are growing numbers of world economists who believe that the debt crisis has now also become a banking crisis and have little hope that the spread will be stopped before another round of global bank failures
