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.
Reflecting this, the IMF has slightly revised up its global growth forecasts, with the global economy expected to grow by 3.5 per cent in 2012, up from 3.3 per cent in their January WEO update.The IMF is also forecasting global growth of 4.1 per cent in 2013, revised up from 3.9 per cent.
Global growth continues to be underpinned by solid growth in Asia.China is expected to grow 8.2 per cent in 2012 and 8.8 per cent in 2013, while India is expected to grow 6.9 per cent in 2012 and 7.3 per cent in 2013.These forecasts are broadly unchanged from the IMF's January update.
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 MYEFO 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.
This is the message I'll be taking to at this weekend's meeting of G20 Finance Ministers Meetings in Washington, as well to my meetings with IMF Managing Director, Christine Lagarde, the outgoing President of the World Bank, Robert Zoellick, and the Chairman of the US Federal Reserve, Ben Bernanke.
The IMF's confirmation of Australia's strong economic fundamentals - with solid growth and low unemployment - further underscores the importance of returning the budget to surplus, and giving the Reserve Bank maximum flexibility to cut interest rates if it considers that is necessary. Clearly the uncertain global environment and structural changes in the economy will continue to impact on budget revenues, making the return to surplus in 2012-13 more challenging.
However, considering the lax fiscal policy that has caused severe economic and social destruction in many advanced economies, delivering on the Government's fiscal strategy sends a clear message about our strong economy and is our best defence in a changing global environment.