The situation has not been helped by fiscal policy issues in the US, sovereign debt crises in the euro area and the continued plight of many banks which are still feeling the effects of the crisis, the OECD pointed out. On the jobs front, the situation looks bleak, as improvements seen earlier in the year have started to fade, with hiring intentions softening, raising the danger of entrenched high unemployment.
Policymakers will have their work cut out to turn matters round and in particular to boost confidence. They will need to take real and credible steps to curtail debt, for a start, while also reforming the structure of their economies, in areas such as competition, to unblock growth. In Mr Padoan's view, the short-term funding needs of banks may have to be considered too.
In the meantime, however, the risk of hitting patches of negative growth going forward has gone up, the OECD's chief economist said.
What's your view? Do you see a risk of another recession, or are you optimistic that a recovery will take hold? What policies would you recommend? Your comments below.
©OECD Observer September 2011