Australians are being assured the nation is well placed to deal with global economic upheaval, amid fears of an impending recession in the United States.
A leading economist has also downplayed the likelihood of a US recession, insisting its economy is in good shape.
The Australian share market shed more than $63 billion on Thursday in response to fears of a recession, marking its worst day in 18 months.
Treasurer Josh Frydenberg said Australia will continue to monitor what’s happening overseas and take all necessary actions to ensure the economy continues to grow.
Mr Frydenberg is particularly mindful of an ongoing trade war between the US and China.
“Australia is not immune from the fallout of these trade tensions and we are certainly not complacent,” he told AAP on Friday.
“But with strong foundations our economy is positioned as well as any nation to withstand these challenges.”
A global stock market rout came after the US bond yield curve inverted for the first time in more than a decade.
The trend, when long-term bonds start earning less interest than short-term ones, has preceded every American recession in the past 50 years.
CommSec chief economist Craig James said the development is one driven by fear.
He believes the US is likely safe from a recession, given its healthy consumer spending and unemployment at a 50-year low.
“I don’t think we should be talking about it at all, basically,” he told AAP of the chance of a recession,” he said.
“You look at the US economy and you’d have to say that things are in pretty good shape.”
Finance Minister Mathias Cormann said the government was also glad to see some progress in the US-China trade war, with Donald Trump saying on Thursday he thought it would be “fairly short”.
“We have been pleased to see that there has been some movement,” Senator Cormann told Sky News.
Mr Frydenberg said the government’s tax cuts and $100 billion in spending on infrastructure over 10 years would help keep the economy ticking along.
But Labor frontbencher Tony Burke said the government needed to bring forward some of its infrastructure spending and consider structural issues, such as levels of joblessness and underemployment.
“You can’t use the international circumstances as cover for the fact that structurally we do have some weaknesses in Australia now.”
Mr James said even if the US were to enter a recession, Australia would be protected by the state of its budget, which is essentially in balance.
Wages are also rising, albeit slowly, and house prices have stabilised.
“There’s no major imbalances in terms of our economy,” he said.
The ATO has already given $10 billion to Australians this tax time, $2 billion higher than at the same time last year.
In the coming weeks and months, Mr James said, it will become clearer what impact that has has on the economy and whether the Morrison government should consider more stimulus.