The Morrison government has abandoned its goal of eliminating net debt by the end of the next decade, as growing economic headwinds force it to slice $2 billion off this year's forecast surplus.

Treasury has also cut its employment forecasts, predicting jobs growth would "moderate" over the coming years.

The economy now won't hit Treasury's forecast of the natural rate of unemployment of five per cent until 2021-2022, pushing any predicted return to normal levels of wage growth of above three per cent out until 2022.

Declaring the outlook for the Australian economy remained positive, Treasurer Josh Frydenberg noted both the International Monetary Fund and the Organisation for Economic Co-operation and Development had downgraded global growth in 2019 and 2020 as "economies the world over experience the challenges from global trade tensions".