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In a sign of the ongoing effects of the credit crisis, the Organization for Economic Cooperation and Development on Tuesday said the European economy would grow more slowly than forecast.
The OECD's report had little good news for the global economy
Eurozone countries will see their economies grow by only 1.2 percent in 2008 instead of the 1.7 percent the OECD had predicted previously, with the United States and Japan faring little better, according to Tuesday's forecasts.
"Financial market turmoil, housing market downturns and high commodity prices continue to bear down on global growth," the OECD said in an interim assessment issued in Paris.
While the organization's short-term forecasting models "point to weak (economic) activity through the end of the year," it said that many uncertainties about what is driving the economic situation "make for an unclear picture."
Still, the OECD steered clear of the word "recession", even when describing Britain, where it predicts the economy will shrink in the third and fourth quarters this year -- activity typically associated with a recession.
The OECD's chief economist, Jorgen Elmeskov, told Reuters news agency that the British economy was stagnating, while continental Europe was "barely crawling."
G7 nations still suffering
The US housing market is still in a slump despite government efforts to recover from the sub-prime crisis
And even though the US did better in the second quarter, its overall outlook remains sickly despite government efforts to kickstart the economy following the sub-prime crisis that sparked the global financial meltdown last year.
Although Elmeskov acknowledged that his organization's quarterly forecasts are subject to sizeable margins of error, the OECD's basic message is that the economy of the G7 -- the US, Japapn, Germany, Britain, France, Italy and Canada -- was still "very weak."
"Continued financial turmoil appears to reflect increasingly signs of weakness in the real economy, itself partly a product of lower credit supply and asset prices," the OECD said.