Jim Chalmers has described the global economy as "on the edge" during his first trip to the United States as treasurer.
Speaking in Washington DC, he also ruled out changes to the legislated stage 3 tax cuts in his upcoming budget.
"The backdrop for this budget is a deteriorating global economy and rising inflation at home and persistent structural pressures on the budget," he said.
"Our forecasts for global growth will be substantially lower than they were even in the July statement that I released.
"Now, that will have implications for our own growth and our own economy and for unemployment."
Dr Chalmers said he is "taking the temperature" of the global economy while in Washington DC for a meeting of the G20 finance ministers on Thursday, local time.
He also plans to attend high-level meetings at the International Monetary Fund (IMF) and World Bank.
In an interview that aired in the US on Tuesday, US President Joe Biden told CNN he didn't believe the US economy was headed for recession.
But Dr Chalmers gave a gloomier assessment.
"I think there's a pretty broad expectation around the world, that there's a big risk of recession here in the United States, as there is [in] UK and Europe," he said.
The risk of recession in some major economies has "has clearly edged over from possible to probable and that could have implications for us", he added.
IMF issues 'sober warning'
The set of numbers that have greeted Dr Chalmers and other global leaders descending on the US capital are dire.
Dr Chalmers characterised a recent assessment by the International Monetary Fund (IMF) as a "sober warning".
Earlier this week, the IMF downgraded its forecast for global growth next year, citing "a number of turbulent challenges".
Those included sky-high inflation and the lingering impacts of the COVID-19 pandemic and its associated supply chain issues.
The IMF now only expects the global economy to grow by 2.7 per cent in 2023, a downgrade of 0.2 percentage points from its previous projection in April.
Meanwhile, global inflation is forecast to rise from the 4.7 per cent recorded in 2021 to 8.8 per cent in 2022.
There is some good news, however: the IMF believes global inflation will decline to 6.5 per cent in 2023 and to 4.1 per cent by 2024.
Interest rates and Australian dollar
The world's most powerful central bankers are also in Washington this week for the annual meetings of the IMF and World Bank.
Dr Chalmers flagged he would meet with Jerome Powell, the chairman of the US Federal Reserve, later in the week.
Mr Powell is perhaps the most influential economic decision-maker in the world.
To tame soaring interest rates, the US central bank has this year hiked interest rates at the most rapid pace in decades.
Dr Chalmers warned that further US rate hikes could also acutely impact Australians by pushing up costs.
"As US interest rates rise, downward pressure on the Australian dollar puts upward pressure on inflation at home because the cost of imports goes up," he said.
When pushed on whether the contentious stage 3 tax cuts would still be implemented as planned, Dr Chalmers confirmed there would be no changes to the plan in this budget, but did not rule out future changes.
"The stage 3 tax cuts are around three budgets away as they're currently legislated and so we've got more pressing priorities in the interim.
"The best thing that we can do right now … is to make sure that what we propose in the budget isn't counterproductive."
