Westpac's chief economist Bill Evans has lifted his growth forecast for 2020 and 2021 following this week's better than expected third quarter GDP data.

The bank raised its forecast for 2020 from a contraction of 3 per cent to a contraction of 2 per cent, while the economy is now expected to grow 4 per cent in 2021 compared to a prior forecast of 2.8 per cent.

Westpac expects the level of consumer spending and the level of GDP will return to the end-2019 levels by the June quarter 2021.

By end 2021, GDP will be around 2 per cent above the end-2019 level but still around 3 per cent below the level of GDP that would have been expected in the absence of COVID-19.

The revised 2021 forecast is based on a lift in consumer sentiment to a seven year high being sustained and the increased momentum in the housing market continuing.

Mr Evans also highlights the government's commitment to continue to target a lower unemployment rate in the 2021 Budget and the boost to markets and global growth prospects from the prospect of an effective vaccine.

He also noted the significant buffer of savings that will accommodate a large fall in the savings rate, ongoing reopening momentum, and a likely upward revision to the government’s "currently overly pessimistic" net migration forecasts.