The federal Treasury has warned that global threats to the Australian economy have intensified in the past few months amid wild fluctuations on financial markets.
Speaking after a shock 19 per cent surge in the iron ore price on Monday night, which helped push the Australian dollar to an eight-month high, Treasury's deputy secretary Nigel Ray said heightened 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.
He also said major official forecasters had repeatedly downgraded prospects for global growth - in   January the International Monetary Fund issued its 17th growth downgrade in five years.
"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."
Mr Ray said Australia's biggest trading partner, China, was going through a difficult transition but he expected authorities to manage it "pretty well".
"Australia has the highest proportion of its exports going to China of any advanced economy, accounting for around 32 per cent of our total merchandise exports last financial year," he said.
While offshore hazards had intensified, Mr Ray said domestic factors would be crucial to Australia's economic performance over the next two years, especially the strength of household spending.
"We need consumption growth to continue to grow strongly - we need the savings ratio to come down to achieve that - and we need ... Australian businesses to invest."
Mr Ray also announced that Treasury would introduce improvements to its economic forecasting including the appointment of an expert advisory panel and an expansion of the department's liaison with businesses and private sector economists.