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Will Greece Default on its Debt, and Take the Eurozone Down with It?

As the European Commission holds its regular monthly meeting in Brussels this week, ministers find themselves debating what to do about the Greek debt crisis — the biggest credibility test the Eurozone has faced since the single currency was created.

The question is whether the 16 countries that share the European Union's (EU) currency can force a rogue member with a weak economy to take drastic measures to cut its budget deficit without calling in the International Monetary Fund (IMF) or sparking social unrest.

Still in the depths of recession, Greece is plagued by a spending deficit that rose to 12.7% of gross domestic product (GDP) last year, far in excess of the 3% ceiling permitted to countries in the union. It's also saddled with debt amounting to 113% of GDP, which prompted Moody's Corp. (NYSE: MCO) to downgrade its debt to A2 from A1 on December 22.

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OECD More Than Doubles 2010 Forecast, as China Leads the World Out of the Recession

The Organization for Economic Cooperation and Development (OECD) more than doubled its 2010 forecast for developed nations, saying that strong growth in Asia – particularly China – would help pull the “more feeble” West out of its financial malaise.

After predicting in June that the combined economy of its 30 member nations would grow 0.7% in 2010, the OECD raised its forecast for developed economies to grow 1.9% next year and 2.5% in 2011. Economic output will contract by 3.5% this year, the Paris-based organization said today.

We now have the numbers that support a recovery in motion,” Jorgen Elmeskov, the OECD's acting chief economist, told Bloomberg News. “It's still a slow recovery because of considerable headwinds from the need to adjust the balance sheets of households, enterprises and financial sectors.” The OECD cautioned that the recovery is still fragile in developed nations, while pointing to China as the main catalyst for a global rebound.

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Eurozone Emerges From Recession, but Recovery's Obstacles Will Prove Challenging

The Eurozone economy officially emerged from recession in the third quarter, but the uneven growth throughout the region and the lingering dangers of high unemployment continue to pose a threat to the recovery.

Comprised of the 16 nations that use the euro currency, the Eurozone saw its economy expand by 0.4% in the third quarter from the previous three-month period, Eurostat reported. However, the economy continued to shrink year-over-year, dropping 4.1% after a 2.8% annualized drop in the second quarter. The greater 27-nation EU economy grew by 0.2% on a quarterly basis.

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Eurozone Growth Revised Down as Inflationary Pressures Trump Economic Growth

By Jason SimpkinsAssociate Editor First-quarter growth in the 15-nation Eurozone was weaker than first reported, yet another worrying development for a region already struggling with soaring inflation. The combined Eurozone economy grew by 0.7% in the first quarter compared to the three months prior, revised down from a previous forecast of 0.8%, Eurostat reported. While […]

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