TREASURER Wayne Swan has hailed Australia's new standing as the world's 12th largest economy as a remarkable achievement.

Australia has overtaken beleaguered Spain in the International Monetary Fund's latest World Economic Outlook.

Since 2007, when Labor came to power, the local economy has passed South Korea and Mexico as well.

"As a country with the world's 51st largest population, this is a remarkable achievement," Mr Swan said in a statement on Tuesday.

"(It) demonstrates the Australian community's hard work and resilience, as well as the government's sound economic management, during a time of global economic upheaval."

In the report, released in Tokyo, the IMF made across-the-board cuts to its world economic growth forecasts, saying uncertainty weighed heavily on the outlook.

Its forecast for world output in 2012 is now 3.3 per cent, down from the 3.5 per cent expectation in July.

The growth forecast for 2012 has been cut to 3.6 per from 3.9 per cent previously.

"The recovery has suffered new setbacks," the report says.

"A key reason is that policies in the major advanced economies have not rebuilt confidence in medium-term prospects."

While it has upgraded its growth forecast for Australia to 3.3 per cent for 2012 from its previous prediction of three per cent, the IMF has downgraded the outlook for 2013 to three per cent from 3.5 per cent previously.

Even so, Mr Swan said the forecast was twice the growth rate of advanced economies as a whole and consistent with the local economy growing around trend.

"The Australian economy remains the standout performer of the developed world," he said, adding the government remained on track to return the budget to surplus in 2012/13.

That was well ahead of every major advanced economy, although weaker global growth and lower commodity prices would clearly make the task more challenging.

Mr Swan will travel to Japan later this week for the annual meetings of the IMF, World Bank and the East Asia summit finance ministers' meeting.

The meetings would provide a timely opportunity to get a first-hand assessment of regional and global economic developments and discuss the challenges facing the global economy, the treasurer said.

Originally published as Australia grows to 12th largest in world