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OECD boss: U.S. can't be complacent

By CNN wire staff
updated 7:47 AM EDT, Fri May 31, 2013
STORY HIGHLIGHTS
  • OCED report found a global economic recovery would be a "multi speed" process
  • Growth in advanced economies should "strengthen gradually" from the middle of this year
  • Unemployment for the 17-nation euro-area will not peak until 2014, at 12.3%

(CNN) -- There is no room for complacency on the U.S. economy. That is the message from the head of the Organisation for Economic Cooperation and Development.

In a week when the OECD predicted in its Economic Outlook that the stimulus-driven U.S. would emerge from the economic swamp sooner than austerity-ridden Europe, Gurria expressed concerns that a lack of urgency on Capitol Hill could hinder growth.

Gurria told CNN: "Frankly I don't think there is any room for complacency, even in the case of the U.S.," he said, noting the ongoing budget cuts sucking at growth.

The report found that growth in advanced economies should "strengthen gradually" from the middle of this year through to 2014.

But Gurria explained that the global economic recovery will be "multi-speed" and the U.S. is "where we see the more robust growth."

The outlook for Europe is far gloomier one. Saddled with high national debts and chronic unemployment, many countries in the eurozone will continue to suffer from the harsh austerity measures imposed by governments to tackle the crisis, according to the report.

Unemployment for the 17-nation euro-area hit another record high of 12.2% in April, with youth unemployment reaching 24.4%.

Southern European nations are the worst affected in the crisis with Greece, the first country to receive a rescue fund more than three years ago, now in its sixth year of recession.

Italy, Spain, Portugal, Cyprus and Ireland make up the rest of the eurozone countries that have undergone severe economic hardship since the outbreak of the crisis in 2010.

Gurria noted countries like Spain or Greece, where youth unemployment is above 50%, have conditions that are "more difficult."

Politicians in Europe are seeking closer fiscal ties, and the OECD used the outlook to call for bolder measures and a faster track to a full-fledged banking union.

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.

CNN's Oliver Joy contributed to this report.

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