OECD cuts 2016 growth forecast to 3.0%

The OECD on Thursday cut its 2016 economic growth forecast by 0.3 percent to 3.0 percent 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 Organisation for Economic Cooperation and Development 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 percent 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 that added poor growth prospects were pushing down equity prices, helping to spark the market volatility seen in recent weeks.