The Organisation for Economic Cooperation and Development is forecasting a sharp slowdown next year for the euro zone.
Its downbeat outlook came just days before a summit of leaders of the G20 world’s largest economies.
The OECD warned if those leaders fail to restore confidence in battered state finances it could lead to a major contraction in developed countries.
The economic think-tank has dramatically slashed its growth forecast for next year for the euro area to 0.3 percent; back in May it was talking about two percent.
It also cut the growth estimate for the United States to 1.8 percent from May’s 3.1 percent.
It is only in 2013 that the OECD anticipates the US economy picking up again with a 2.5 percent expansion.
As the report was released, President Barack Obama said he will hold bilateral meetings with France’s President Nicholas Sarkozy and Germany’s Chancellor Angela Merkel at the G20 summit.