PARISThe uncertain future of U.S. fiscal and central bank policies poses a growing risk to a global economic recovery that has already been weakened by a slowdown in growth in many developing economies, the Organization for Economic Co-operation and Development said Tuesday.
 
In its twice-yearly Economic Outlook report, the Paris-based research body said the U.S. debt ceiling should be abolished, and replaced by "a credible long-term budgetary consolidation plan with solid political support."
 
The report marks a significant shift in the OECD's focus of concern, which in recent years has been centered on the euro zone's attempts to tackle its fiscal and banking crises. While the OECD remains worried about the euro zone's frailties, the most immediate threats to the global recovery now appear to come from the U.S.
 
The OECD said a series of events has undermined confidence and stability in recent months, including the "surprisingly strong" reaction by investors to the possibility that the Federal Reserve will soon start to reduce its asset-purchase program. That led to related concerns about developing economies, and was followed by a "potentially catastrophic" crisis precipitated by negotiations over the U.S. debt ceiling.
 
"These events underline the prominence of negative scenarios and risks that the recovery could again be derailed," OECD chief economist Pier Carlo Padoan said.
 
The heightened risks from the U.S. are in addition to continued ones from a fragile euro-zone banking sector and Japan's fiscal situation, the OECD said.
 
The warnings came as the OECD forecast only a modest economic recovery through 2015. The combined economies of the 34 members of the OECD will grow 1.2% this year, before accelerating to 2.3% in 2014 and 2.7% in 2015, according to its forecasts.
 
Growth rates between developed economies will continue to differ markedly with the euro zone contracting 0.4% this year before growing 1% next year, while the U.S. will grow 1.7% and 2.9% over the same periods.
 
The twice-yearly economic outlook is slightly weaker than in May, mainly because of an expected slowdown in some large developing economies that partly reflects their vulnerability to capital outflows when the Federal Reserve does eventually start to reduce its stimulus program.
 
"The turmoil following the tapering discussions in mid-year has revealed how sensitive some emerging market economies are to U.S. monetary policy," the OECD said.
 
The OECD cut its 2014 growth forecast for Brazil to 2.2% from 3.5% in May, its forecast for India to 4.7% from 6.7%, and its forecast for Indonesia to 5.6% from 6.2%. It cut its growth forecast for China more modestly to 8.2% from 8.4%, still leaving it above that of many other economies.
 
The research body said the weaker growth outlook for some developing economies was more deeply rooted in "long-standing structural impediments that had been hidden by abundant capital inflows." Solutions to those problems vary from country to country, but generally developing economies need more formal and efficient labor markets and stronger, market-based financial systems, Mr. Padoan said.
 
Largely as a result of its more downbeat assessment of the outlook for large developing economies, the OECD cut its forecast for global gross domestic product growth by around 0.5 percentage points this year and next to 2.7% and 3.6%, respectively.
 
The OECD said that even if it creates turbulence and damages other economies, the Federal Reserve should nonetheless wind down its asset purchases next year if unemployment continues to fall and inflation strengthens, and start to raise its benchmark interest rate in 2015.
 
"Over the medium-to-long term, the costs of excessive liquidity are rising. Tapering has to begin at some stage," Mr. Padoan said.
 
The OECD also stressed the dangers arising from the U.S. debt ceiling. If the ceiling became binding—a fate narrowly avoided in October—the U.S. economy would be catapulted into a deep recession, according to the think tank's analysis.
 
Even if such a scenario were to be avoided, the continuing negotiations will still be damaging.
 
"The continuous affair of discussing debt every few months is simply detrimental to confidence levels and therefore growth," Mr. Padoan said.
 
In the euro zone, weak bank balance sheets and fragile public finances could still unsettle financial markets, the OECD said. The euro-zone swiftly must correct any capital shortfalls it finds in its banks, as a banking sector in disrepair could easily get out of control, Mr. Padoan said.
 
The OECD also acknowledged that there is an increased risk of deflation in the euro-zone and welcomed the recent cut in the European Central Bank's main refinancing rate to 0.25%.
 
"If the deflationary risks increase, the ECB should be prepared to do more, including having negative deposit rates and buying more assets on the secondary market," Mr. Padoan said.
 
The OECD also added its voice to recent criticism of Germany's role in helping to rebalance the euro zone's economy, noting that while southern European nation have trimmed their trade gaps, "much less adjustment, if any, is taking place in surplus countries."
 
"More durable and symmetric adjustment is needed through reforms to labor and product markets, including liberalization of services in Germany that would strengthen and rebalance demand," Mr. Padoan said.
 
The OECD said that in Japan, "strong" efforts to cut the budget deficit are needed to slow the pace at which the government's debt is rising.
 
"In view of the extraordinarily high public debt ratio, a more detailed and credible medium-term consolidation plan is required to maintain confidence in government finances," the OECD said.