Stefan Steinberg - Sharp Divisions On Eve Of EU Summit
May 24, 2012 European leaders meet on Wednesday to discuss the deepening European crisis. On the eve of the summit, the Organization for Economic Cooperation and Development (OECD) issued a report that confirms the intensification of recessionary trends.
The OECD Economic Report released Tuesday warns that the “fragile, extremely uneven” international recovery “could be derailed by the crisis in the euro area.”
The OECD has downgraded its prognosis for growth in its 34 member states from an annual rate of 1.8 percent in 2011 to 1.6 percent in 2012. The report makes clear that the chief culprit in dragging down world growth is Europe. “The crisis in the euro zone remains the single biggest downside risk facing the global outlook,” said OECD chief economist Pier Carlo Padoan on Tuesday.
In what amounts to an indictment of the austerity policies imposed by the “troika”—the European Union, the European Central Bank and the International Monetary Fund—the report highlights the risk of a renewed banking crisis across the continent. It states: “Adjustments in the euro area are now taking place in an environment of slow or negative growth and deleveraging, prompting risks of a vicious circle involving high and rising sovereign indebtedness, weak banking systems, excessive fiscal consolidation and lower growth.”
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