The Organization for Economic Cooperation and Development on Wednesday revised its growth outlook for the world economy higher by 0.1 percent to 2.7 percent in 2023, citing easing inflationary pressures and the reopening of China.

The Paris-based organization was more upbeat than three months ago about growth prospects for the United States, China and the euro zone. But it downgraded again the outlook for Japan to 1.3 percent growth from the 1.4 percent projected earlier, reflecting slackening overseas demand.

Despite the upgrade, the OECD said the projected growth rate will be well below the level seen in the decade before the COVID-19 pandemic, warning of "significant uncertainty" and downside risks to the economic outlook.

"Restrictive monetary policy will constrain demand growth for some time to come, with the full effects from policy tightening in 2022 only appearing later this year or in the early part of 2024," the report said.

Global economic growth is projected to pick up from 2.7 percent this year to 2.9 percent in 2024, unchanged from its previous estimate in March.

High inflation rates, driven by recovering demand in the aftermath of the COVID-19 fallout and surging energy prices amid Russia's war in Ukraine, have prompted aggressive interest rate hikes by the U.S. Federal Reserve and the European Central Bank, among others.

The Bank of Japan, however, remains an outlier, sticking to its dovish stance even as Japan has also seen inflation quickening at the fastest pace in decades.

The OECD flagged the prospect that inflation would remain elevated. "Significant additional monetary policy tightening may then be required to lower inflation, raising the likelihood of abrupt asset repricing and risk reassessments in financial markets," it said.

In Japan, government subsidies aimed at reducing utility bills for households have limited the rise in core consumer prices in recent months. Such subsidies "should become more targeted" given its limited fiscal space, the OECD said.

The U.S. economy is forecast to grow 1.6 percent in 2023, rather than 1.5 percent in the previous outlook.

With its reopening providing a boost to global economic activity, China will likely see its economy expand 5.4 percent this year, instead of 5.3 percent.

The euro zone economy is tipped to grow 0.9 percent, up from 0.8 percent.