The Australian economy is "weak", with households weighed down by slow wages growth and higher taxes, the OECD has declared in a report that backs lower interest rates, calls for more government spending and paves the way for unconventional monetary policies.

In its six-monthly review of the global economy, the Paris-based think tank has sharply downgraded its expectations for Australia while raising serious concerns about the level of debt being carried by households.

The OECD has downgraded growth and employment expectations while calling on the Morrison government to lift spending. Credit:Gabriele Charotte

The Morrison government this week announced $3.8 billion of infrastructure projects would be pulled forward or given additional funding over the next four years. The decision followed calls from the Reserve Bank of Australia (RBA), which has sliced official interest rates to a record low 0.75 per cent, for a lift in public spending plus productivity-enhancing structural reforms.

But economists have warned the new spending will equate to less than 0.1 per cent of gross domestic product (GDP), arguing much more needs to be done to get the economy growing fast enough to bring down the national unemployment rate.