IMF upgrades Australian growth outlook

When Treasurer Scott Morrison says the Australian economy is the envy of the world's advanced economies, it's not an idle boast.

A note prepared by the International Monetary Fund for this weekend's G20 finance ministers and central bank governors' meeting in China shows that it has upgraded its 2016 growth forecast for Australia to 2.8 per cent.

In April, the Washington-based institution had expected a growth rate of 2.5 per cent for this year.

Since April, Australia posted its strongest 12-month growth rate in over three years at 3.1 per cent.

It comes at a time when the IMF has downgraded its world growth forecast in the aftermath of Britain's surprise decision to leave the European Union.

Advanced G20 economies are now expected to grow by just 1.7 per cent this year.

Even the US, the world's biggest economy, is only expected to grow by 2.2 per cent.

But before Australia gets too cocky, its 2017 growth forecast has been trimmed to 2.8 per cent from three per cent previously.

Like the update to its April World Economic Outlook released this week, the IMF's G20 note focuses on the impact of Brexit.

It urges a smooth and predictable transition to the new relationship between the UK and EU, saying it is essential gains from trade are preserved.

"While uncertainty about the outcome of negotiations remains, policymakers should stand ready to act decisively should financial market turbulence threaten the global outlook," it says.

More broadly among the G20, it says for many advanced economies repairing budgets remains critical to lifting investment and containing vulnerabilities.