AUSTRALIA looks set to continue to be one of the world's strongest economic performers.

A new outlook from the International Monetary Fund predicts the country will do better than expected over the next two years.

In its latest World Economic Outlook the IMF forecasts a strengthening global economy, now expecting it to grow by 3.9 per cent this year following an unprecedented contraction of 0.8 per cent last year.

It says the Australian economy grew by just under one per cent in 2009, but predicts growth of two per cent in 2010 and three per cent in 2011.

Federal Treasurer Wayne Swan says the IMF forecast shows the Federal Government's reaction to the global financial crisis, including its multi-billion dollar stimulus measures, were right.