Australia's expected economic growth has been slashed for this year and next year but Treasurer Josh Frydenberg insists he doesn't have to choose between growth and a surplus.
The International Monetary Fund's World Economic Outlook, released on Wednesday morning, predicts Australia to grow at 1.7 per cent in 2019, down from a predicted 2.1 per cent.
Global growth for 2019 is down to three per cent, from a predicted 3.2 per cent.
"The Australian economy is facing some significant headwinds. The global headwinds are real, and you've seen that in the IMF report today, and their description of a synchronised slowdown," Mr Frydenberg told reporters in Canberra on Wednesday.
"(But) you can have a strong budget position and a strong economy."
The IMF also predicts Australia's economy will grow 2.3 per cent in 2020 - down from a predicted 2.7 per cent in the April forecasts.
The Reserve Bank of Australia has cut interest rates three times since the May election, down to a record low of 0.75 per cent.
Former Liberal treasurer Peter Costello said there were diminishing returns in cutting interest rates much further.
"I just don't think there's much stimulation left in monetary policy," he said in Sydney on Wednesday.
The IMF warned against relying on interest rate cuts to boost economies, and argued for government to spend some money.
"Monetary policy cannot be the only game in town and should be coupled with fiscal support where fiscal space is available," the report said.
Labor leader Anthony Albanese said the Reserve Bank can't keep doing the heavy lifting.
"Underemployment is at record levels. People are saying they want more hours, they want more work," he said.
"We have productivity going backwards, we have interest rates at 0.75 per cent. The Reserve Bank minutes show they're looking at another decrease very soon.
"We have consumption that is through the floor, we have wages that aren't increasing, we have energy prices putting pressure on households."
Labor has put forward a series of ideas to stimulate the economy without hitting the surplus, including lifting Newstart, bringing forward income tax cuts, giving tax breaks for business investment, and bringing forward infrastructure spending.
So far the coalition has only agreed to bring forward some infrastructure spending, but no projects have been identified.
Australia has been a big winner of the United States and China's trade war, with China spending on infrastructure and buying raw materials from Australia.
But the IMF warns the global economy is in a synchronised slowdown, and the only bright spots are countries recovering from bad results in 2018.
Australian Associated Press