Global Growth Hit By 'Tepid' Investment

A respected economic think-tank has sharply downgraded its forecast for world economic growth this year, saying "tepid" investment by businesses is partly to blame.

The Organisation for Cooperation and Development (OECD) warned of a low growth spiral unless more measures were taken to spur demand and incite firms to boost their spending, particularly on new technology.

The Paris-based body, which watches over 34 of the world's most developed countries including Britain, predicted the world economy would strengthen by 3.1% this year, down from the 4% it projected in March.

A significant portion of the downgrade was attributed to weakness in the United States.

The OECD said that while it expected the world's largest economy to bounce back from damage caused by fierce winter storms , it remained concerned about the effects of the strong dollar.

It slashed its forecast for the US economy, now expecting GDP growth of 2% in 2015 down from its earlier prediction of 2.4%.

The body also cited worries about the effects of any rate rise implemented by the US central bank, the Federal Reserve.

Fed chair Janet Yellen has signalled a rise is likely later this year.

The OECD said the 19-member eurozone was still expected to grow 1.4% this year but it highlighted risks from any deterioration of the crisis facing Greece .

A separate study released on Wednesday warned that uncertainty over the financial future of Greece was weighing on the eurozone economy.

Markit said its purchasing managers' index - a broad gauge of business activity - for May fell to a three-month low however official figures also showed unemployment falling across the euro area in April.

The OECD trimmed its forecasts slightly for China and Japan while it saw the UK economy growing by 2.4% this year despite growing evidence that the crucial service sector slowdown is deepening.

It pointed to weak investment as being partly to blame for the downgrade to its world GDP forecast.

It is expecting investment growth of little more than 2% this year.

The organisation said its forecast of stronger growth in 2016 hinged on its prediction that spending would almost double to 4% next year.