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OECD: U.S. will recover faster, Europe faces unemployment crisis

updated 9:23 AM EDT, Wed May 29, 2013
Pier Carlo Padoan, deputy secretary-general and chief economist, said the European Central Bank could investigate more non-conventional ways to promote growth.
Pier Carlo Padoan, deputy secretary-general and chief economist, said the European Central Bank could investigate more non-conventional ways to promote growth.
STORY HIGHLIGHTS
  • Growth in advanced economies should "strengthen gradually" from the middle of this year through to 2014
  • Greece, the first country to receive a bailout more than three years ago, is now in its sixth year of recession.
  • The OECD used the outlook to call for faster movement toward a full-fledged eurozone banking union

Editor's note: CNN's Irene Chapple is reporting from the Organisation for Economic Cooperation and Development (OECD) Council meeting in Paris. Follow her on Twitter.

(CNN) -- The global recovery is emerging, but it has two speeds: That of the stimulus-fed U.S. and that of the austerity-starved eurozone, according to a new report.

The Economic Outlook from the Organisation for Economic Cooperation and Development, released Wednesday, paints a picture of pain for some economies as major nations struggle to emerge from recession and unemployment in Europe soars to record levels.

Read more: Portugal economy minister: 'We are suffering but will persevere'

The survey gives some ammunition to stimulus supporters with its projections showing the U.S. is emerging from the financial mire better than Europe, which is facing a new crisis of extreme youth unemployment.

Growth in advanced economies should "strengthen gradually" from the middle of this year through to 2014, the report found.

Read more: OECD: End nears for Japan's deflationary spiral

However, the upturn "continues to diverge across countries, with the U.S. likely to grow faster than other large OECD economies."

Euro area growth, the report continued, "remains constrained by the lingering effects of the euro area crisis, the ongoing drag from fiscal consolidation and weaknesses in credit markets."

The OECD used the outlook to call for bolder measures solve the crisis and faster movement toward a full-fledged banking union.

Read more: Survey: Australia the 'lucky country' for a better life

Writing in the report, Pier Carlo Padoan, deputy secretary-general and chief economist, said the European Central Bank could investigate more non-conventional ways to promote growth and the euro area needed to continue repairing deputy its banking system.

Watch more: OECD's video on economic outlook

"As euro area policy has often been behind the curve, perceptions of strong disagreement among members states could have negative consequences on confidence and exacerbate fragmentation," he wrote.

Greece, the first country to receive a European Union bailout more than three years ago, is now in its sixth year of recession.

Meanwhile, its youth unemployment levels have shot over 60%, according to Eurostat's lastest figures.

Stimulus or austerity? Share your views and experiences

The report found labor markets would firm in the U.S. and Japan but unemployment would continue to rise in the euro area through 2014.

The report warned: "Structural reforms are essential to prevent cyclical unemployment from becoming structural."

The OECD said U.S. annual GDP growth will be 2.8% in 2014, up from 1.9% in 2013. The euro area will contract by 0.6% in 2013 before growing by 1.1% in 2014.

In total, the OECD countries will have GDP growth of 1.2% in 2013 rising to 2.3% in 2014.

Euro area unemployment is predicted to peak at 12.3% in 2014, from 12.1% in 2013.

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