OECD cuts world growth forecast - and says the eurozone is heading for trouble

It has also called for an easing of austerity - and says the US and German economies will slow

The Organisation for Economic Cooperation and Development (OECD) has cut global growth forecasts, saying that Brazil, Germany, the broader eurozone, and the US are slowing and that emerging markets are exposed to currency fluctuations.

It now expects global gross domestic product to grow by 3% this year - the same level of expansion registered in 2015 and 0.3% less than the last forecast in November.

The slowdown is due to disappointing demand, weak investment and a "substantial" risk of further financial instability.

Euro

The report is highly critical of the eurozone, it downgraded its growth projection by 0.4% in 2016 and 0.2% next year - to 1.4% and 1.7%.

"The slow recovery in the euro area is an important factor dragging on the global recovery and leaves Europe vulnerable to global shocks," the report says.

It continues: "A central concern is the risk of the euro area getting stuck on a low growth, low inflation path with confidence about medium-term growth being too weak to generate higher investment and the innovations and reallocation that would strengthen productivity and employment growth."

Austerity

The Think Tank has also called on rich countries to ease austerity and to invest more in infrastructure projects to boost economic activity.

It has also criticised central banks for being over-reliant on quantitative easing and has warned that the creating of new money and low-interest rates will not create a lasting economic recovery.

It has called for a more balanced approach

“Monetary policy cannot work alone. Fiscal policy is now contractionary in many major economies. Structural reform momentum has slowed,” the report said.

Macro slowdown 

Growth forecasts for the US and Germany have both been downgraded by 0.5%.

The US is now expected to grow by 2% this year and 2.2% next year - while Germany's will grow by 1.3% and 1.7%.

British growth has also been downgraded, it is expected to expand by 2.1% in 2016 and 2% in 2017 - that's a reduction of 0.3% on last November's estimates.