Growth in the major industrialised economies has ground to a halt and will barely grow in the second half of this year, the Organisation for Economic Co-operation and Development (OECD) has revealed.
In a marked downward revision of its previous predictions, the body said falling household and business confidence is affecting both world trade and employment and causing a period of little or no expansion in the developed world.
However, it went on to reveal that growth remains strong in most emerging economies, even though the pace has slowed somewhat.
"Growth is turning out to be much slower than we thought three months ago and the risk of hitting patches of negative growth going forward has gone up," OECD chief economist Pier Carlo Padoan said during a presentation of the OECD's latest Interim Economic Assessment.
He added that quarterly growth in the second half of 2011 would average less than 0.2 per cent.
The OECD recommended that central banks should keep policy rates at present levels and should lower rates if signs of recovery diminish.
Further central bank interventions in securities markets and the withdrawal of monetary tightening in emerging economies were also put forward.
It added that countries must take credible steps to curtail debt to rebuild market confidence.
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