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The glum report came despite signs that the eurozone crisis is ebbing. World markets rose Tuesday hours after Greece's euro partners and the International Monetary agreed to hand over more bailout cash to the country. There had been fears that Greece might be forced to leave the euro, potentially destabilizing the world economy. The OECD warned that more needs to be done to link eurozone economies closer together and said progress toward a banking union is "essential" to stabilizing the euro. It warned that if the European crisis doesn't stabilize it could plunge the world economy into deep recession. "The risk of a major contraction cannot be ruled out." It also expressed concerned about the so-called fiscal cliff in the U.S., automatic tax increases and steep spending cuts that take effect in January unless President Barack Obama and Congress reach a budget agreement. "If the fiscal cliff is not avoided, a large negative shock could bring the U.S. and the global economy into recession," the report said. It suggested that countries with stronger economies such as Germany and China could provide temporary fiscal stimulus to boost growth.
[Associated
Press;
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