Westpac has lifted its forecasts for the Australian economy in 2020 from minus 4.7 per cent to minus 3.5 per cent.

It expects September quarter growth of 1.8 per cent, from a previous flat forecast, and December quarter growth of 2.2 per cent, from a previous forecast of 2.8 per cent. For 2021, the bank revised down its growth estimate from 3.0 per cent to 2.5 per cent.

The bank's unemployment rate forecast improved to 7.8 per cent from 8.5 per cent for 2020, It held its forecast for 2021 at around 7.5 per cent.

Westpac's chief economist Bill Evans said that this week's GDP data showed a sharply higher savings rate "highlighting the significant improvement in household balance sheets which would be consistent with considerable pent up demand to spend.

"In earlier recessions, a contraction in spending has been a voluntary decision associated with shocks to incomes and confidence. In this recession the contraction has been the result of government policy aimed at protecting Australians from the health risks associated with Covid-19."