Paris, February 18

The Organisation for Economic Cooperation and Development (OECD) today cut its 2016 economic growth forecast by

0.3 per cent to three per cent owing to disappointing data, sluggish demand, weak investment and a ‘substantial’ risk of

financial instability.

“Financial instability risks are substantial,” the Paris-based 34-member OECD said in its latest interim outlook, urging a strong collective response to combat sagging global growth, which it predicts will not surpass 2015’s already pallid showing.

The body trimmed its outlook for this year as growth slows in many emerging countries and advanced economies

only expected to achieve modest recovery after a 2015 that saw the slowest growth in five years.

In its November outlook, the OECD had already lopped 0.3 per cent off its initial 2016 estimate to 3.3 per cent, citing stagnating trade amid a slowdown in China.

But it said it felt compelled to make a further downward revision.

“A stronger collective policy response is needed to strengthen demand,” said the organisation, noting ‘contractionary’ fiscal policy in many major economies amid slowing structural reform.

The organisation identified furthers risk as emerging market currency volatility and debt, notably in Russia, Turkey and Brazil.

It added that poor growth prospects were pushing down equity prices, helping to spark the market volatility seen in

recent weeks.