OECD cuts global growth forecast to 2.7% from 3.1%

The Organisation for Economic Cooperation and Development (OECD), a grouping of advanced industrialised countries, has cut its global growth forecast for 2013, citing a deterioration in emerging markets.

The group has now projected expansion of the world economy by 2.7 per cent this year, as against its May forecast of 3.1 per cent. It also cut its 2014 growth outlook to 3.6 per cent from 4.0 per cent.

The report projects India's economy expanding 3.4 per cent this year and 5.1 per cent in 2014, down from 5.7 per cent and 6.6 per cent previously.

OECD chief economist Pier Carlo Padoan told Bloomberg in an interview, that most of the emerging economies had underlying fragilities that meant they could not continue growing as they used to.

They used to be an important support engine for global growth in bad times, but now the reverse was true and advanced economies could not be said to be in very good times again, he said.

"The recovery is real, but at a slow speed, and there may be turbulence on the horizon," OECD secretary general Jose Angel Gurría said in a statement.

According to Gurria, the OECD was concerned about the possibility of another round of political brinkmanship in the US.

He added that the Fed's plans to eventually wind down its stimulus programme could also bring a renewed bout of instability.

The International Monetary Fund cut its forecasts for global growth last month, pointing to the weaker-than-expected expansion in emerging markets (See: IMF slashes global growth forecast).

The OECD's latest forecast was even weaker than the IMF's growth prediction of 2.9 per cent this year.