An economic recession can be avoided in Europe but resources are needed to calm financial markets, the chief economist of the Organisation for Economic Cooperation and Development (OECD) said.
In an interview in Italy's La Stampa daily, Pier Carlo Padoan said next Monday's OECD forecasts will present lower and very weak growth projections based on a negative scenario, reflecting the serious financial crisis in the euro zone.
"No, (a recession) can still be avoided. But at the European level there is a need for sufficient resources to calm markets and governments have to go forward with austerity measures," Padoan said in the interview.
"If this happens, we can not only exit the crisis but start again on a more sustainable and stable growth path," he said.
The European Central Bank has played an essential role for stability via its bond buying and supplying unlimited liquidity for money markets and banks, he said.
A European monetary fund is needed to give money to countries in exchange for set conditions, he added.
A weak German bond auction yesterday represents a further worsening of the crisis, Padoan said.
"If the reference country for the euro zone does not succeed in placing state bonds, it means that investors fear for the overall system," he said.