Global threats to the Australian economy have intensified in the past few months amid wild fluctuations on financial markets, federal Treasury says.
Speaking after a 19 per cent rise in the iron ore price on Monday night Treasury's deputy secretary Nigel Ray said volatility on international stock markets was likely to continue in a "lower growth, lower inflation" world economy. 
"Global risks are tilted to the downside and have intensified in recent months," he said. While Treasury's "central case" is that the economy will continue its long uninterrupted expansion, Mr Ray said national disposable income per capita - a proxy for standards of living that's been in decline since around 2011 - could continue to lag.
"That would have implications for growth in living standards and government revenue," he said.
Australia cannot expect "a resurgence in the global economy to underwrite our national prosperity", Mr Ray said.
In a separate speech on Tuesday, Reserve Bank deputy governor Philip Lowe warned global economic dynamics were becoming increasingly difficult to understand.
Dr Lowe said inflation has been subdued globally, even though employment has been growing strongly in countries like the US, Britain and recently Australia.
It means inflation may continue to be very low, with monetary policy very accommodative.
"In earlier decades, it was very rare for central banks to worry that inflation and inflation expectations were too low. Yet today, we hear this concern quite often, and the 'unconventional' has almost become conventional," he said. The former US Treasury secretary, Larry Summers, warned in The Financial Times overnight that what the world was witnessing - with ultra-low inflation and inflation expectations - was as significant as the "stagflation" of the 1970s which took the economics profession years to wrap its head around.
The challenges presented would "require shifts in policy paradigms if they are to be resolved", he said.
Mr Ray said major official forecasters have repeatedly downgraded prospects for global growth
"Slower global growth has been accompanied by a number of trends that are observable across the global economy: slower growth in trade; weak business investment; slower productivity growth; slower population growth in advanced economies; low inflation; and lower inflation expectations," he said.
Mr Ray said domestic factors would be crucial to Australia's economic performance over the next two years.
"We need consumption growth to continue to grow strongly ... the savings ratio to come down to achieve that and ... Australian businesses to invest," he said.