PARIS, Sept 5: The OECD lowered its growth forecasts for the US and eurozone economies on Wednesday and warned that world prospects were “clearly less buoyant” because of financial market instability.

The Paris-based economics body delivered a pessimistic diagnosis as it updated its previous forecasts from May, saying that the full impact of the US housing crisis and related problems in financial markets could not yet be measured.

The new projections for growth were based on backwards-looking second-quarter data and chief OECD economist Jean-Philippe Cotis suggested that further revisions were probable.

The May forecasts “were not revised that much,” he said, adding: “Year averages mainly reflect past developments and prospects going forward are now clearly less buoyant and more uncertain.

“Downside risks have become more ominous, in a context where overall financial market conditions are likely to remain durably tighter.”

The Organisation for Economic Cooperation and Development marked down its forecasts for the G7 as a whole, with eurozone powerhouses France, Germany and the United States predicted to be much weaker than previously expected.

The combined Group of Seven economies will grow by 2.2pc this year, compared with a previous forecast of 2.3pc, while the US economy will grow by 1.9pc instead of 2.1pc.

The French economy is now forecasted to expand by 1.8pc instead of 2.2pc, while Germany was marked down to 2.6pc instead of 2.9pc with Italy down to 1.8pc from 2.0pc.

The eurozone as a whole would grow by 2.6pc instead of 2.7pc.

The forecast for the Japanese economy was stable at 2.4pc, while Britain and Canada were upgraded to 3.1pc and 2.7pc respectively.

The OECD is an influential Paris-based institution with a membership of 30 leading developed countries. It does research for its member countries and issues advice to policymakers.—AFP