The OECD has warned treasurer Joe Hockey the economy might not be strong enough to withstand further big budget cuts.
In its latest Economic Outlook released in Paris the Organisation for Economic Co-operation and Development says Mr Hockey should continue to pursue his goal of returning the budget to surplus by the early 2020s.
But it says "given economic uncertainties, it should avoid heavy front-loading"- that is, cutting too much, too soon.
Mr Hockey will deliver the Mid-Year Economic and Fiscal Outlook in the week beginning December 15.
The statement is expected to contain few new measures, but will will provide an opportunity for the government to explain how it respond to a dive in the iron ore price from $US103 a tonne at the time of the May budget to less than $US70 this week.
It'll also be under pressure to explain how it replace the billions of dollars of savings measures blocked in the Senate.
The OECD expects Australian growth to dip to 2.5 per cent in 2015 (lower than the budget forecast) before climbing to 3 per cent by 2016.
By then it believes that declining business investment will be countered by gathering momentum in consumption and exports.
Only in 2016 does it expect Australia's unemployment rate to fall, to 5.9 per cent.
By then the economy should be strong enough to support further budget tightening.
The OECD expects the Reserve Bank to begin tightening interest rates in the second quarter of 2015.
It says the booming housing market and mortgage lending will require "continued close attention".
The OECD's judgements are widely felt to reflect those of Australia's treasury.
The treasury employs a full-time representative to work with the OECD in Paris.
