The Federal Government has confirmed a budget deficit of $47 billion this year, up from the $30 billion that was forecast just months ago.

The Mid-Year Economic and Fiscal Outlook (MYEFO) has painted a bleak picture of the economy, forecasting deficits for the next four years.

The combined deficits over the forward estimates period total $123 billion, with a small surplus forecast in August for 2016-17 of $4.2 billion blowing out to an $18 billion deficit.

Treasurer Joe Hockey has told the National Press Club that Australia faces a "challenging fiscal and economic mountain".