The global economy is enjoying its strongest performance since the start of the decade but the International Monetary Fund has warned these favourable conditions won't last forever.
In its latest World Economic Outlook - which included a modest upgrade to its Australian growth forecast - the IMF says governments should seize the opportunity to bolster growth and take action to counter the next downturn.
"Now is the moment to get ready for leaner times," IMF economic counsellor Maurice Obstfeld says in the report released in Washington on Tuesday.
"Readiness requires not only cautious and forward-looking management of monetary and fiscal policies, but also careful attention to financial stability."
The IMF stuck to its most recent world growth forecast of 3.9 per cent for both this year and next, the strongest pace since the growth spike which initially followed the 2008-2009 global financial crisis.
It says the global upswing that began in mid-2016 has become broader and stronger led by faster growth in the Euro area, Japan, China and the US.
It upgraded its Australian growth forecast to three per cent for 2018 from its previous 2.9 per cent prediction made in February, while keeping 2019 at 3.1 per cent.
"The partial recovery in commodity prices should allow conditions in commodity exporters to gradually improve," the Washington-based institution said.
Such growth should help the Australian jobless rate ease to 5.2 per cent in 2019 and close to what the Reserve Bank believes to be 'full employment' at five per cent.
The unemployment rate was 5.6 per cent in February.
However, the IMF warns future growth prospects look challenging for advanced economies faced with ageing populations and low productivity growth, making it hard for household income growth to return to their pre-GFC pace.
It also says interest rates may need to rise more quickly than expected if excess demand emerges, which would stress highly indebted countries, firms, and households.
It saw this as a notable possibility in the US where fiscal policy has turned much more expansive even as the economy has neared full employment.
Escalating trade restrictions and retaliation is another risk to the outlook, it said, noting the first shots in a potential trade war involving the US have now been fired.