The Organization for Economic Cooperation and Development (OECD) cut its global economy growth forecast for 2016 by 0.3 percentage points in its latest report issued on Thursday.
The organisation forecast the global economy would expand by 3 percent in 2016 in its latest Interim Economic Outlook report, down 0.3 percentage points from its previous forecast.
OECD’s growth forecast for next year was also slashed by 0.3 percentage points in the report, down to 3.3 percent.
“The world economy is likely to expand no faster in 2016 than in 2015, its slowest pace in five years. Trade and investment are weak. Sluggish demand is leading to low inflation and inadequate wage and employment growth,” the report claims.
The organisation cut its 2016 forecasts for the US by 0.5 points to 2 percent. It expects the US economy to grow by 2.2 percent in 2017, down 0.2 points.
The eurozone is also expected to grow less than previously forecast, down to 1.4 percent from 1.8 percent. For next year the OECD trimmed its forecast by 0.2 points.
There is a need for "a stronger policy response, changing the policy mix to confront the current weak growth more effectively," the OECD said.
Sole reliance on monetary policy has proven insufficient to boost demand and produce satisfactory growth and there is need for structural reforms, the OECD added.
However, the body did not rule out the benefits of accommodative policies in supporting economies until "inflation has shown clear signs of moving durably towards official targets."