Growth is likely to climb to 1.5 percent this year, Hammond said in Parliament Tuesday, higher than the 1.4 percent forecast in November.
Mr Hammond has said he might be able to allow a bit more public spending later this year.
He is set to unveil consultations on a single-use plastics tax and a possible tax on the profits of digital giants like Facebook and Google.
And after the Chancellor compared Labour to gloomy cartoon character Eeyore and himself to the more optimistic Tigger, shadow communities secretary Andrew Gwynne joked that Mr Hammond was "talking Pooh".
He said: "I remind the House that the party opposite voted against it".
The debt forecast is almost 1% lower than in November, Mr Hammond said.
The UK government will negotiate a Brexit that delivers prosperity and jobs, Hammond said.
Mr Hammond said his deputy Elizabeth Truss would publish the departmental allocation of more than £1.5 billion of Brexit preparation funding for 2018-19.More news: Jaguars WR Robinson to sign with Bears
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However, he added there will be more pay for NHS staff if management and workers reach a deal on a pay agreement.
The world's sixth-biggest economy would grow a bit more slowly than previously thought in the following two years, by 1.4 and 1.5 per cent respectively in 2021 and 2022.
The country's official budget forecasters are expected to say on Tuesday they are raising their projection for economic growth this year, after cutting it to 1.4 per cent in November, at the time of the last budget statement. The body left its forecasts unchanged for 2019 at 1.3%.
Borrowing is now forecast to be £45.2 billion this year, £4.7 billion lower than forecast in November.
Economists expect Mr Hammond will announce Government borrowing is set to be about £7bn lower in 2017-18 than had been predicted when he unveils the latest forecasts of the Office for Budget Responsibility (OBR), which will for the first time include spending estimates for the £35-39bn Brexit "divorce bill" agreed with the European Union in December.
Britain's Chancellor of the Exchequer Philip Hammond leaves 11 Downing Street to deliver his half-yearly update on the public finances, in London, March 13, 2018.
Mr Hammond said there was still work to be done, but the Government would always take a balanced approach to reducing the debt, investing in public services and keeping taxes low, said the PM's spokesman.