Investing.com - The Organization for Economic Cooperation and Development cut its global growth forecast for this year and warned that some emerging markets are at risk of exchange-rate volatility, according to its latest outlook published Thursday.
The OECD said global gross domestic product will expand 3.0% in 2016, down from November’s prediction of 3.3%.
The Paris-based think tank expects the U.S. economy to grow by 2.0% in 2016 and 2.2% in 2017, down from November’s projected expansions of 2.5% and 2.4%, respectively.
The U.S. is facing “an intensification of headwinds, including the drag on exports from the stronger dollar and energy sector investment from low oil prices,” according to the report.
The OECD cut its euro zone growth forecasts to 1.4% and 1.7% from 1.8% and 1.9%, and nudged down its German growth forecast for this year to 1.3% from 1.8%.
China’s growth is now pegged at 6.5% this year, while Brazil’s economy is expected to shrink 4% this year, according to the OECD.
"The downgrade in forecasts is broadly based, reflecting a wide range of disappointing incoming data for the fourth quarter of 2015 and the recent weakness and volatility in global financial markets," the OECD said.
The organization added that, “Some emerging markets are particularly vulnerable to sharp exchange-rate movements and the effects of high domestic debt.”
Global financial markets have been roiled this year by fears over a slowdown in China, the world’s second-largest economy.
The OECD urged governments around the world to consider offering more fiscal stimulus to support monetary efforts already underway.
“Monetary policy cannot work alone. Fiscal policy is now contractionary in many major economies. Structural reform momentum has slowed. All three levers must be deployed more actively to create stronger and sustained growth.”