The International Monetary Fund believes there are "significant risks and uncertainties" in the Australian economy.
The global body, in its latest consultation report on Australia, welcomed the government's plan to balance the budget over four years and focus its policies on economic growth.
"While the balance of risks to the growth outlook has improved, there remain significant risks and uncertainties, notably weaker-than-expected domestic consumption, housing-related vulnerabilities, the rise in protectionist policies in the global economy, and a significant slowdown in Australia's main trading partners," the IMF executive board said.
With this in mind, the government needed to continue macroeconomic reform and boosting long-term growth.
The report said Australia had not been immune to some elements of the "new mediocre" in the global economy.
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"Wage and price pressures have been weak, underemployment has risen, and private business investment outside mining has been lacklustre," it said.
Treasurer Scott Morrison said the report also noted Australia's economic performance had been robust compared with other advanced economies.
"The IMF attributes Australia's sustained economic success to sound policy frameworks, identifying our flexible exchange rate, credible monetary policy, strong institutions, sound financial sector supervision and transparent fiscal policy as key strengths," he said.
It also showed the need to press ahead with reforms to boost productivity and foster innovation.
