THE key European countries have entered into recession and left the scars on global economy resulting in global slowdown.

OECD in its latest interim economic assessment said that the economic outlook has weakened significantly since last spring with continuing euro area crisis is going to dampen global confidence, weaken trade and employment and derail economic growth for OECD and non OECD countries alike.

OECD has projected that euro area’s three largest economies –Germany, France and Italy will shrink at an annualized rate of 1% on average during the third quarter and at 0.7% in the fourth.

The German economy is expected to contract, French outlook is slightly better with a trivial pick up in growth and in Italy deep recession will prolong with contraction.

The feeble growth outlook is expected to push unemployment and resolution of the euro area’s banking, fiscal and competitiveness problems is still the key to recovery.

A number of downside risks threaten the outlook, including the potential for further increases to already high oil prices, excessive fiscal contraction, notably in the United States in 2013, and further declines in consumer confidence linked to persistent unemployment.