Australia’s economy will grow faster than previously forecast this year, as global growth accelerates following the roll-out of coronavirus vaccines, the International Monetary Fund says.

In new forecasts released this week, the Washington-based organisation says it now expects global output to increase 5.5% this year, higher than the 5.3% it expected in October. The global economy shrunk 3.5% last year, less than the 4.4% forecast, it says.

The Australian economy is now projected to grow 3.5 % this year – 0.5% higher than forecast in October – and 2.9% in 2022.

The IMF says the increased outlook for 2021 reflects “additional policy support in a few large economies and expectations of a vaccine-powered strengthening of activity later in the year, which outweigh the drag on near-term momentum due to rising infections.

“The upgrade is particularly large for the advanced economy group, reflecting additional fiscal support – mostly in the United States and Japan – together with expectations of earlier widespread vaccine availability.”