A new International Monetary Fund report highlights why the Reserve Bank and Treasurer Scott Morrison are optimistic about the economic outlook.
In an update of its April World Economic Outlook, the IMF is sticking with its firm economic projections for global growth.
While it has made a modest downgrade to the US outlook, it has lifted forecasts for Japan and China, Australia's two biggest trading partners.
However, while there was no specific mention of Australia in the update, the IMF warns commodity exporters should continue adjusting to lower revenues while diversifying their sources of growth over time.
"The recovery in global growth that we projected in April is on a firmer footing," IMF economic counsellor Maurice Obstfeld said, releasing the report in Kuala Lumpur on Monday.
"There is now no question mark over the world economy's gain in momentum."
The IMF predicts the global economy will grow by 3.5 per cent this year and 3.6 per cent in 2018 after the 3.2 per cent expansion in 2016.
It reduced its forecast for the US for 2017 and 2018 because US fiscal policy looks less expansionary than the IMF believed in April, but at 2.1 per cent growth for both years it stands above the lacklustre 1.6 per cent performance in 2016.
The UK has also been marked down for this year given its tepid economic performance, while the ultimate impact of Brexit remains unclear.
However, growth has been revised up for Japan and the euro area after positive activity surprises in late 2016 and early 2017.
China too has been revised up, reflecting a strong first three months of 2017 and the expectations of continued government fiscal support.
KEY IMF ECONOMIC GROWTH FORECASTS
World - 2016 3.2 per cent, 2017 3.5, 2018 3.6.
US - 2016 1.6 per cent, 2017 2.1, 2018 2.1.
Euro area - 2016 1.8 per cent, 2017 1.9, 2018 1.7.
UK - 2016 1.8 per cent, 2017 1.7, 2018 1.5.
Japan - 2016 1.0 per cent, 2017 1.3, 2018 0.6.
China - 2016 6.7 per cent, 2017 6.7, 2018 6.4.
India - 2016 7.1 per cent, 2017 7.2, 2018 7.7.
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