The United States and Japan are leading a fragile developed world recovery that could be blown off course if Europe fails to contain the damage from its problem debtor states, the OECD said on Tuesday.
It urged euro-zone leaders to embrace all options for tackling the crisis, potentially including common bonds to go with the common currency.
In its twice-yearly economic outlook, the Paris-based Organization for Economic Co-operation and Development forecast that global growth would ease to 3.4% this year from 3.6% in 2011, before accelerating to 4.2% in 2013, in line with its last estimates from late November.
"The global economic outlook is still cloudy," OECD Secretary General Angel Gurria told reporters.
Growth across the organization's 34 members, generally the wealthiest in the world, would ease this year to 1.6% from 1.8% in 2011 and then reach 2.2% in 2013, the OECD said, also roughly in line with previous estimates.
Gurria said that public finances were "fragile", and in some cases "in dire straits", in OECD countries.
A perception that the burden of the economic crisis had not been fairly shared was fueling a confidence crisis and European leaders should consider all possible measures to mend the bloc's debt problems.
Piling pressure on euro-zone leaders on the eve of an informal summit focused on boosting growth, Gurria said Europe could only solve its debt crisis if it stays open to all options, including ideas like euro-zone bonds, which are a taboo for Germany.
The OECD forecast that the 17-member euro zone economy would shrink 0.1% this year before posting growth of 0.9% in 2013, though regional powerhouse Germany would chalk up growth of 1.2% in 2012 and 2.0% in 2013.
Although OECD economies were on the mend, the euro crisis could still spiral out of control with Greece struggling to remain solvent and Spanish banks needing to be recapitalized, officials said
The European Central Bank's injection of one trillion euros ($1.3 trillion U.S.) of liquidity into the euro zone's banking system and an increase in European bailout funds and IMF reserves had helped keep the bloc's crisis from spiraling out of control.
In particular, the ECB should not rule out buying government bonds again to keep borrowing costs down, lending to the ESM European bailout fund and cutting its benchmark interest rate, which currently stands at 1.00 percent. The ECB could also consider another injection of liquidity into the banking system.
Additionally, the time was ripe to begin thinking about introducing bonds jointly underwritten by euro nations to fund projects and possibly bank re-capitalizations, some officials said amid growing concerns that Spain's banks in particular are short of sufficient capital.
New French President Francois Hollande is eager for the euro area to begin talking seriously about such bonds at a dinner summit on Wednesday focused on how to revive growth in the bloc.
But Germany remains deeply opposed to the idea out of concern it would be tantamount to wealthy countries footing the bill for countries that overspend in the absence of more oversight of fiscal policy from the E.U. level.
In contrast to the euro-zone, the United States was expected to continue to benefit from easy credit conditions and ultra-loose monetary policy, its economy forecast to grow 2.4% this year and 2.6% in 2013. In November, the OECD had forecast 2.0% for 2012 and 2.5% for 2013.
Although some budget tightening and a still weak housing market would be a drag on growth, private sector demand would continue to strengthen as the unemployment rate eased to as low as 7.5% by the end of 2013 from 8.1% in April.
The OECD said that while the United States needed to step up the pace of its fiscal tightening, if tax cuts were allowed to expire as scheduled in 2013 it could threaten growth.
Japan's economy was set to grow 2.0%this year and 1.5% in 2013 as a reconstruction boom after last year's earthquake and tsunami faded, although recovering world trade would offer support.
A rebound in global trade would be a bright spot for many economies, with the OECD forecasting a surge from 4.1% growth this year to 7.0% in 2013.
Export giant China was forecast to grow 8.2% this year and 9.3% in 2013 as interest rate cuts and increased social spending propped up domestic demand in the economy, which is not an OECD member.
