The May budget is set to forecast a surge in economic growth, much lower unemployment and a rebound in inflation, according to a 'sneak preview' released by the International Monetary Fund Wednesday morning in Washington.

The Fund's updated forecasts for Australia contained in its annual World Economic Outlook are much more upbeat than those in its special survey of Australia released in February.

In February the Fund described Australia's outlook as "mediocre".

It consults with the Australian Treasury before finalising its forecasts.