The organization for Economic Cooperation and development raised its forecasts for global economic growth for 2023, but lowered its growth forecasts for next year in the wake of high interest rates aimed at controlling inflation.
It predicted that the global economy will grow by 3 percent this year, compared with the 2.7 percent contained in the organization’s forecast issued in June.
But it noted that it expects growth to remain below the level, falling to 2.7 percent next year, compared with 2.9 percent in previous forecasts.
“After a stronger-than-expected start to 2023, helped by lower energy prices and the reopening of China’s economy, global growth is expected to moderate again,”the OECD said in its report.
“The impact of tighter monetary policy is becoming increasingly clear, consumer and business confidence has declined, and the recovery in China has faded,”she added.
Central banks around the world have increased lending costs in an effort to control consumer prices, which rose sharply in the wake of the Russian-Ukrainian war last year.
Claire Lombardelli, chief economist at the OECD, said at a conference: “We are all witnessing how the tightening of monetary policy affects our economies. It is a necessary step to reduce inflation, but it is painful,”he said.
The European Central Bank raised its key interest rate to a record high last week, but hinted that the increase may be the last, while the Federal Reserve is expected to stop raising rates on Wednesday.
