The International Monetary Fund is more confident global growth is accelerating, but sees risks in "rich" equity prices and low market volatility.

In an outlook that will likely bolster the Reserve Bank's hopes for a long overdue global pick-up as it considers domestic interest rate settings, the IMF forecasts the world economy will grow 3.5 per cent in 2017 and a slightly faster 3.6 per cent in 2018.

The headline forecasts, unchanged from April and up from a sub-par 3.2 per cent in 2016, mask an underlying improvement in the outlook for China, Europe and Japan, because of better-than-anticipated momentum in their economies.

"The recovery in global growth that we projected in April is on a firmer footing; there is now no question mark over the world economy's gain in momentum," said the IMF's top economist, Maurice Obstfeld.

Despite the upbeat international assessment, the forecasts for world growth are still below the average before the 2008 global financial crisis.

And the fund is wary of persistent low inflation and a lack of wages pressure throughout much of the world.

The IMF also calls out several risks to the global economy that could derail the unfolding pickup.

"While risks around the global growth forecast appear broadly balanced in the near term, they remain skewed to the downside over the medium term," the IMF's world economic outlook update said.

The current combination of "rich" equity valuations, extremely low market volatility and economic policy uncertainty from governments and central banks has made asset prices vulnerable to a "correction", the fund said.

"In China, failure to continue the recent focus on addressing financial sector risks and curb excessive credit growth [mainly through tighter macroprudential policy settings] could result in an abrupt growth slowdown, with adverse spillovers to other countries through trade, commodity price, and confidence channels," it added.

The IMF estimated US growth at 2.1 per cent this year and again in 2018, consistent with what the fund said June 27 in its annual assessment of the US economy.

On monetary policy, the IMF said a faster-than-expected rise in US interest rates could tighten global financial conditions and trigger reversals in capital flows to emerging economies.

Bond traders are betting that there is only about a 50 per cent chance of the US Federal Reserve raising interest rates again before the end of this year.

More broadly, the IMF warns that a more protracted period of policy uncertainty, including for President Trump's fiscal and regulatory policies and the post-Brexit negotiations, could "harm confidence, deter private investment, and weaken growth".

In a tacit warning about the Trump administration's financial deregulation agenda, the IMF said a broad rollback of financial rules and oversight imposed since the 2008 crisis, could have "negative repercussions" for global financial stability.