Treasurer Wayne Swan expects the economy will still be growing at trend in the current financial year when he hands down Treasury's latest economic forecasts with the mid-year budget review.
The Mid-Year Economics and Fiscal Outlook (MYEFO) is due to be released within the next few weeks.
The Reserve Bank of Australia cut its growth forecasts earlier this month to 3.25 per cent for both 2011/12 and 2012/13, around the long-term trend and down from previous forecasts 4.0 per cent and 3.75 per cent respectively, levels which Treasury had also forecast in the May budget.
Mr Swan said slower growth would mean less government revenue, but the government remained determined to bring the budget back to surplus in 2012/13 as planned.
"We're continuing to work our way through all of the issues for the presentation of MYEFO," Mr Swan told ABC radio on Thursday.
"What I've said that we will be doing - as we normally do - is a savings exercise and because of what's occurred in terms of the global economy and what has occurred in terms of budget revenues, there will be savings in this MYEFO."
Some economists have warned that if the government cuts too deeply it will risk slowing the economy even further.
"I think everybody should hold fire until we see MYEFO," Mr Swan said.
"I'd also make the point that we are still expecting growth of around trend in terms of 2011/12 but our fiscal objectives are very important and they are particularly important given the global economic environment we're seeing at the moment."
Visiting US President Barack Obama told a media conference on Wednesday that he was "deeply concerned" about the events in Europe and the turmoil on financial markets would probably continue until the region's leaders put in concrete plans and stood behind the euro.
Mr Swan agreed, saying that Europe must get a "firewall" in place.
"What we need to see is some action, that's what the world is looking for. We've heard enough words over an 18-month period, what we need now is action."
New data on Thursday highlighted the multi-speed nature of the economy, showing wages in the mining sector well over double the earnings of workers in cafes and restaurants.
The Australian Bureau of Statistics data showed average weekly ordinary time earnings (AWOTE) grew 1.2 per cent seasonally adjusted in the three months to August.
This lifted the average annual wage by an annual 5.3 per cent to $68,790, well ahead of inflation, as measured by the consumer price index at 3.5 per cent.
However, the composition of the AWOTE series tends to make it volatile, which is why the Reserve Bank prefers to use the wage price index - released on Wednesday - as one of its main guides to wages growth.
That index showed growth at a more contained 0.7 per cent in the September quarter for an annual rate of 3.6 per cent.
Still, AWOTE does provide useful dollar estimates for industry groups.
Miners now earn on average just under $112,392 a year, while at the other end of the scale, those working in accommodation and food services drew an average salary of $49,878.
"The growth in wages over the past year clearly corresponds with the growth in the economy," Commonwealth Securities economist Savanth Sebastian said.
"A whole array of sectors are struggling or going backwards, while mining investment remains the backbone of growth."
