The world's policymakers must act quickly to encourage growth, with the global economy seen expanding by only 3 percent this year, according to the Organization for Economic Co-operation and Development (OECD).
"Global growth prospects have practically flat-lined, recent data have disappointed and indicators point to slower growth in major economies, despite the boost from low oil prices and low interest rates," OECD Chief Economist Catherine Mann said in a report published on Thursday.
The OECD has cut its global growth estimates for both 2016 and 2017 by 0.3 percentage points since its last forecast in November. It now sees the world economy expanding by 3 percent in 2016 — the same rate as in 2015 and the slowest pace in five years.
Growth is seen at 3.3 percent in 2017, which the OECD said was well below the long-run average of around 3.75 percent.
"Given the significant downside risks posed by financial sector volatility and emerging market debt, a stronger collective policy approach is urgently needed, focusing on a greater use of fiscal and pro-growth structural policies, to strengthen growth and reduce financial risks," Mann warned.
This year, the U.S. economy is seen growing by 2 percent and the U.K. expected to post 2.1 percent growth. Japan is forecast to grow by only 0.8 percent, with the euro area expected to grow by 1.4 percent.
In the emerging world, the OECD forecasts that China's economy will expand by 6.5 percent in 2016, with India's growing by 7.4 percent.
However, Brazil's economy is in a deep recession and is expected to shrink by 4 percent this year. Standard & Poor's cut the country's credit rating on Wednesday to BB with a negative outlook, from BB+, citing political and economic challenges.
JPMorgan and Markit's latest global composite purchasing managers' index (PMI) suggests the world economic growth is slowing. Global PMI came in at a 13-month low of 52.5 in January, which was the weakest reading since December 2014.
The OECD advises that monetary policy remain highly accommodative in advanced economies until inflation shows clearer signs of recovering.
Currently, the European Central Bank and the Bank of Japan are conducting asset purchases and the Bank of England is yet to raises interest rates from record lows. However, the U.S. Federal Reserve started raising rates in December.