The OECD has today cut its 2016 economic growth forecast by 0.3% to 3% due 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. 

It also urged a strong collective response to combat sagging global growth, which it predicts will not surpass 2015's already pallid showing. 

The OECD 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% off its initial 2016 estimate to 3.3%, citing stagnating trade amid a slowdown in China. 

But it said today 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.

The US and Germany suffered the biggest downgrades among major developed economies, with the OECD slashing its 2016 forecast by half a percentage point for both countries to 2% and 1.3% respectively. 

The OECD now expects US and euro zone growth to slow from the previous year, to 1.4% for the latter, and to pick up only marginally in 2017 to 2.2% and 1.7% respectively. 

The OECD left its forecasts for Chinese growth unchanged for the next two years, but still expects growth to slow to 6.5% in 2016 and 6.2% in 2017. 

In the euro zone, the positive effect of lower oil prices on activity has been less than expected, the OECD said, while very low interest rates and a weaker euro had yet to lead to sustained stronger investment. 

US growth slowed in the second half of last year under the weight of a stronger dollar which dragged on exports, and the impact of lower oil prices on the country's large oil and gas industry. 

Among the largest emerging economies, Brazil was seen as a major victims of falling commodity prices, with a recession expected to be deeper than feared at -4% this year. 

In a rare bright spot, the OECD raised its 2016 forecast for India's growth by 0.1 percentage points to 7.4%.