The IMF's World Economic Outlook (WEO) confirms that our economic fundamentals are strong with the Australian economy expected to outperform every major advanced economy over the next two years.

 

Following a period of acute instability last year, the IMF believes global prospects are improving although downside risks remain. The euro area is still projected to enter a mild recession, and fundamental weaknesses in many European economies continue to pose a clear risk.

 

While global challenges remain, there have been encouraging signs of stabilisation since the start of the year. The improved outlook has been driven by an increase in activity in the United States and better policy responses to the European sovereign debt crisis.

 

Despite the impact of ongoing global uncertainty and uneven conditions across sectors, the IMF expects that the Australian economy will outpace all major advanced economies over the next two years, with forecast growth of 3.0 per cent in 2012 and 3.5 per cent in 2013.

 

These forecasts are broadly consistent with the outlook in the Mid Year Economic and Fiscal Outlook which has the Budget returning to surplus in 2012-13.

 

The IMF also forecasts Australia's unemployment rate to remain low at 5.2 per cent in both 2012 and 2013.

 

With solid growth, low unemployment, contained inflation, strong public finances and a record pipeline of business investment, the Australian economy is the standout performer of the developed world.