The number of jobless people is expected to be nearly 250,000 fewer than forecast in the May budget and the economy is tipped to grow 1.5 per cent this financial year, new federal government figures show.
The government released its 2009/10 mid year economic and fiscal outlook today which has upgraded growth forecasts and slashed unemployment expectations.
The economy is now expected to grow 1.5 per cent in 2009/10, having being forecast to contract by 0.5 per cent in the May budget.
The peak in the unemployment rate is now seen at 6.75 per cent in 2009/10 rather than the 8.5 per cent in 2010/11.
"The improved economic outlook reflects the effectiveness of monetary and fiscal stimulus in Australia, and the stronger global recovery," Treasurer Wayne Swan said in a statement.
"Despite the improved outlook the global recession has still had a marked effect on the Australian economy and challenges remain."
The budget deficit forecast was little changed at $57.7 billion for 2009/10.
Mr Swan said the impacts of the global recession still mean forecast tax receipts remain $170 billion lower than forecast at the time of the 2008/09 budget.
The government said it expected the budget to return to surplus in 2015/16.
