September 20: The Organisation for Economic Co-operation and Development (OECD) raised its global economic outlook for 2023 on Tuesday but cut the growth forecast for next year as "painful" interest-rate hikes aimed at curbing inflation take their toll.

The world economy is now expected to grow 3.0 percent this year, up from the 2.7 percent forecast in the June outlook of the OECD, reported AFP.

According to the French news agency, OECD said global growth was projected to remain "sub-par", slowing to 2.7 percent next year -- down from 2.9 percent in the previous forecast.

"After a stronger-than-expected start to 2023, helped by lower energy prices and the reopening of China, global growth is expected to moderate," AFP reported referring to a report published by the OECD.

"The impact of tighter monetary policy is becoming increasingly visible, business and consumer confidence have turned down, and the rebound in China has faded," it added.

Central banks worldwide have sharply increased borrowing costs in an effort to tame consumer prices which soared in the wake of Russia's invasion of Ukraine last year, added AFP.

"We are all seeing the tightening of monetary policy working its way through our economies. This is necessary to reduce inflation, but it is painful," OECD chief economist Clare Lombardelli said at a press conference.

The European Central Bank raised a key interest rate to a record high last week but hinted this might be its last hike, while the US Federal Reserve is expected to pause its own campaign on Wednesday.

"Inflation is projected to moderate gradually over 2023 and 2024 but to remain above central bank objectives in most economies," the OECD said.