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

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

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.

      Europe's financial crisis

    • German Chancellor Angela Merkel talks with Finance Minister Wolfgang Schaeuble during a session at the Bundestag (lower house of parliament) on June 25, 2013 in Berlin.

      German Finance Minister Wolfgang Schaeuble says the eurozone's problems are not solved, but "we are in a much better shape than we used to be some years ago."
    • IBIZA, SPAIN - AUGUST 21:  A man dives into the sea in Cala Salada beach on August 21, 2013 in Ibiza, Spain. The small island of Ibiza lies within the Balearics islands, off the coast of Spain. For many years Ibiza has had a reputation as a party destination. Each year thousands of young people gather to enjoy not only the hot weather and the beaches but also the array of clubs with international DJ's playing to vast audiences. Ibiza has also gained a reputation for drugs and concerns are now growing that the taking and trafficking of drugs is spiralling out of control.  (Photo by David Ramos/Getty Images)

      Summer could not have come soon enough for Lloret de Mar, a tourist resort north of Barcelona. Despite the country's troubles, it's partying.
    • The Euro logo is seen in front of the European Central bank ECB prior to the press conference following the meeting of the Governing Council in Frankfurt/Main, Germany, on April 4, 2013.

      The global recovery has two speeds: That of the stimulus-fed U.S. and that of the austerity-starved eurozone, according to a new report.
    • The flags of the countries which make up the European Union, outside the European Parliament in Strasbourg, France.

      The "rich man's club" of Europe faces economic decay as it struggles to absorb Europe's "poor people", according to economic experts.
    • Packed beaches and Brit pubs? Not necessarily. Here's what drew travelers to one of Spain's most beautiful regions in the first place

      Spain's economic crisis is in its sixth straight year yet tourism, worth 11% of GDP, is holding its own, one of the few bright spots on a bleak horizon.
    • Photographer TTeixeira captured these images from a May Day protest in Porto, Portugal, Wednesday by demonstrators angered by economic austerity measures. "People protested with great order, but showed discontent against the government who they blame for this economic crisis," she said. "They want the government to resign and the Troika [European Commission, International Monetary Fund and European Central Bank] out of this country."

      As European financial markets close for the spring celebration of May Day, protesters across Europe and beyond have taken to the streets to demonstrate.
    • Croatian Prime Minister Zoran Milanovic delivers a speech in Mostar, on April 9, 2013. Prime Ministers from Bosnia's neighboring countries arrived in Bosnia with their delegations to attend the opening ceremony of "Mostar 2013 Trade Fair".

      As Croatia prepares to enter the 27-nation European Union, the country's Prime Minister says Italy must return to being the "powerhouse of Europe."
    • Anti-eviction activists and members of the Platform for Mortgage Victims (PAH) take part in a protest against the government's eviction laws in front of the Popular Party (PP) headquarters in Mallorca on April 23, 2013.

      Spain's unemployment rate rose to a record high of 27.2% in the first quarter of 2013, the Spanish National Institute of Statistics said Thursday.
    • People protest against the Spanish laws on house evictions outside the Spanish parliament on February 12, 2013 in Madrid, Spain.

      Spain has seen hundreds of protests since the "Indignados" movement erupted in 2011, marches and sit-ins are now common sights in the capital.