The G7 is projected to have overall quarterly growths in the last two quarters of this year less than one percent on average compared with the level a year earlier, the OECD said in its newly released Interim Economic Assessment, leaving larger revision scope for each country.
While excluding Japan, OECD projections posted annualized quarterly growth in G7 economies below one percent in the second half of this year.
The impact of the sovereign debt crisis threatening eurozone and worryingly high deficit in the United States, together with the financial turmoil this summer may have been underestimated, said the report.
According to OECD, the United States is set to grow in the range of 0.5-1 percent during the second half; Japan could see significant growth buoyed by reconstruction in the third quarter after disaster impact, but its performance in the last quarter might be slack as the stimulus effect fades away.
Germany is expected to post one quarter of negative growth following the damping growth rate in the second quarter, while the same could also happen to Italy which has been haunted by sovereign debt problems.
For the last two quarters, Britain is estimated to see modest growth lower than 0.5 percent, whereas Canada's growth rates could range from 1.0-1.9 percent, the assessment said.
In many OECD countries, the economic activities approached to stagnation in the April-June period, said Pier Carlo Padoan, OECD Chief Economist and Deputy Secretary-General when presenting the report, warning that economic situation might become worse than previously forecast.
For the overall situation in the second half, the OECD report presented a combination of upwards and downturn risks.
Negative risks include low construction, business investment and consumption, while "better than expected" improvement in the Federal budgetary situations of the United States present positive dimensions.
In the second quarter, European biggest power Germany and France both saw near-zero growth rates, casting huge gloom of a recession for the eurozone, but OECD said temporary factors including the shutdown of nuclear plants and expiring of car scrapping policy damping growth in respective state is unwinding.
Facing the ongoing difficulties, the advisory agency suggested governments to decide on the space for fiscal polity according to the state of respective public finances.
"Countries with limited fiscal space have restricted scope for fiscal easing and some have to tighten amid cyclical weakness," Padoan said.
As to euro area debt issue, he underlined the first step was to implement the framework decided on the eurozone summit on 21 July, and meanwhile to improve governance and the capitalization of banks in a bid to stop contagion and restore confidence.
Additionally, policy rates in most OECD countries should be kept on hold, the report recommended, adding declining rate is feasible if weakness enduring or a recession looms in the coming months.
As long as necessary, further central bank interventions in security markets, even if at diminishing returns, and strong commitments to keep interest rates low over a certain period may be in need to ease the market, the OECD report added.