The OECD has revised its growth forecasts for the eurozone and called on the European Central Bank to consider doing more to boost growth.
The organization says the eurozone will shrink by 0.6% this year, widening the gap between it and faster-growing economies such as the US and Japan.
Meanwhile, the European Commission has given France two more years to complete its austerity programme.
France fell back into recession in the first three months of the year.
Spain, Poland, Portugal, the Netherlands and Slovenia have also been given more time to complete fiscal tightening.
The move suggests a shift away from a focus on austerity in Europe.
In its twice-yearly Economic Outlook, the OECD said prolonged economic weakness in Europe could damage the global economy.
The OECD, which represents 34 advanced economies, forecast average growth across its members of 1.2% this year and 2.3% in 2014.
It painted a troubled picture of the eurozone economy. The forecast of a 0.6% contraction in GDP is down markedly from the 0.1% contraction forecast just six months ago.
It said eurozone unemployment would continue to rise from its current rate of 12%, stabilizing in 2014.
The OECD has revised its growth forecasts for the eurozone and called on the European Central Bank to consider doing more to boost growth
It blamed continuing austerity measures, weak confidence and tight credit conditions. It hinted that the European Central Bank (ECB) might want to expand quantitative easing (QE) as a measure to encourage stronger growth.
It warned the continuing weakness in Europe “could evolve into stagnation, with negative implications for the global economy”.
The US and Japan have seen a greater focus on stimulus measures compared with Europe, where austerity measures have taken precedence.
Japan is forecast to grow relatively strongly this year, adding 1.6% to its GDP on the back of extraordinary economic stimulus measures introduced by the government this year.
But the OECD said there was considerable uncertainty over whether that recovery would continue into 2014, when the government is expected to cut spending.
In the US, where growth of nearly 2% is forecast for this year, the OECD said quantitative easing measures might need to be “gradually reduced”.
China is not included in the OECD club, but the organization expects its annual growth to be about 8% over the next two years.
The OECD’s chief economist, Pier Paolo Padoan, told Reuters that the eurozone remained the dominant area of concern.
“Europe is in a dire situation,” he told the news agency.
“We think that the eurozone could consider more aggressive options. We could call it a eurozone-style QE.”
[youtube lo8eiZBe7rg]
The US economy created 96,000 jobs in August, according to official figures from the Bureau of Labor Statistics, which is less than was expected.
However, the figure was lower than expected and revisions to June and July data mean that 41,000 fewer jobs were created than previously reported.
Analysts had expected non-farm payrolls to grow by 125,000 last month.
The unemployment rate fell to 8.1%, compared with 8.3% in July, but only because more people gave up looking for work.
The US economy created 96,000 jobs in August, according to official figures from the Bureau of Labor Statistics
Employment increased in food services and drinking places, professional and technical services and healthcare during August, the Bureau said.
Employment growth has averaged 139,000 a month in 2012, the Bureau said, compared with an average monthly gain of 153,000 in 2011.
The percentage of Americans who either have a job or who are looking for one fell to 63.5%, the lowest participation rate since 1981.
The weak figures could put pressure on President Barack Obama in his re-election campaign, given than rival Mitt Romney has put jobs at the centre of the national debate.
Mitt Romney described the figures as “more of the same for middle-class families who are suffering through the worst economic recovery since the Great Depression”.
He claims his economic plan will create 12 million new jobs by the end of his first term.
The figures are also seen as making it more likely that the US Federal Reserve will provide further economic stimulus measures in the form of quantitative easing, as hinted at by chairman Ben Bernanke in a speech on 31 August.
A survey released on Tuesday indicated that growth in the US manufacturing sector remained weak.
The Markit Manufacturing Purchasing Managers’ Index came in at 51.5 in August compared with 51.4 in July. A reading above 50 indicates growth.
Figures released last week showed that the US economy grew at an annualized pace of 1.7% in the second quarter of the year.
Republican VP candidate Paul Ryan acknowledged lobbying the government for millions of dollars in economic stimulus money after twice denying he had done so.
Wisconsin congressman Paul Ryan said he had forgotten that his office sent letters – with his signature – to the Energy and Labor departments asking for money from the stimulus program on behalf of two companies in his home state.
“They should have been handled differently, and I take responsibility for that,” Paul Ryan said in a written statement released only after he again denied requesting stimulus funds in an Ohio TV interview on Thursday.
Paul Ryan’s denial in an interview with Cincinnati’s WCPO-TV contradicted letters he wrote in 2009 to Energy Secretary Steven Chu and Labor Secretary Hilda Solis seeking stimulus grant money for two Wisconsin energy conservation companies.
One of them, the nonprofit Wisconsin Energy Conservation Corp., later received $20.3 million from the Energy Department to help homes and businesses improve energy efficiency, according to federal records.
Republican VP candidate Paul Ryan acknowledged lobbying the government for millions of dollars in economic stimulus money after twice denying he had done so
“After having these letters called to my attention I checked into them, and they were treated as constituent service requests in the same way matters involving Social Security or Veterans Affairs are handled,” Paul Ryan said in a statement late Thursday.
“This is why I didn’t recall the letters earlier.”
Paul Ryan’s denial came as new audio surfaced of Ryan telling Boston’s WBZ Radio two years ago that he “did not ask for stimulus money” in response to a caller’s question about the recovery program.
He said: “I’m not one who votes for something and then writes to the government to ask them to send us money.”
The exchange was first reported Thursday by The Boston Globe.
But a year earlier in his request to Steven Chu for funds for the Wisconsin Energy Conservation Corp. Paul Ryan said the stimulus cash would help his state create thousands of new jobs, save energy and reduce greenhouse gas emissions.
The apparent contradiction underscores Paul Ryan’s conflicts with his larger federal budget proposal as the House Budget Committee chairman.
That plan would slash Energy Department programs aimed at creating green jobs and calls for “getting Washington out of the business of picking winners and losers in the economy – and that includes our energy sector”.
Paul Ryan’s actions in Congress have been drawing fresh scrutiny since he was named last weekend as Republican presidential candidate Mitt Romney’s running mate.
The vice presidential contender is not alone among Republicans who criticized the stimulus plan only to seek money later.
Georgia’s Republican senators, Saxby Chambliss and Johnny Isakson, for example, blasted the bill as a bloated government giveaway yet asked then-Defense Secretary Robert Gates to steer $50 million in stimulus money to a constituent’s bio-energy project.
Paul Ryan’s views are also consistent with Romney’s long-held position that the stimulus was a flawed idea that did not create private sector jobs.
“That stimulus didn’t work,” Mitt Romney said at an Ohio speech in June.
“That stimulus didn’t put more private-sector people to work.”
Yet in Ryan’s letter to the Labor Department in October 2009, he backed the Energy Center of Wisconsin’s grant application for stimulus money “to develop an industry-driven training and placement agenda that intends to place 1,000 workers in green jobs”.
The company did not win the Labor Department grant, federal records show.
Despite the letter, Paul Ryan echoed Mitt Romney’s position on Thursday.
“Regardless, it’s clear that the Obama stimulus did nothing to stimulate the economy, and now the president is asking to do it all over again,” he said.
