The latest forecast for global growth from the Organisation for Economic Cooperation and Development is much more downbeat than its May prediction.
The OECD says the outlook for economic expansion in developed countries has got much worse in the last three months.
It urged central banks to keep interest rates low and be ready to pursue other forms of monetary easing, the most common of which is printing more money.
On the eve of a meeting of finance ministers from the Group of Seven industrialised nations in the southern French city of Marseilles, the OECD urging leaders of G7 and G20 countries to send strong signals to restore flagging confidence.
The latest growth estimates marked a sharp slowdown from the Paris-based organisation’s last forecasts in May but used different methodology so were hard to compare precisely.
The OECD forecast growth across the G7 group of major industrialised economies would average 1.6 percent on an annualised basis in the third quarter before slowing to just 0.2 percent in the final three months of the year.
In May, the OECD had forecast growth across its 34-nation membership of rich nations of 2.8 percent in the third quarter and 2.7 percent in the final three months of the year.
“With respect to three months back the growth scenario looks much worse, one would say that growth is stagnating,” said OECD chief economist Pier Carlo Padoan. “We are witnessing a growth slowdown across OECD countries.”
The slowdown would hit Germany particularly hard, with the OECD forecasting that Europe’s biggest economy would see annualised growth of 2.6 percent in the third quarter before contracting 1.4 percent in the fourth.
The US economy, meanwhile, would see annualised growth of 1.1 percent in the third quarter slowing to 0.4 percent in the fourth quarter.
The OECD, which is due to provide more complete forecasts later this year, warned that its latest outlook had an abnormally high margin of error due to exceptional uncertainty.