The International Monetary Fund has sharply downgraded forecasts for the Australian economy for this year and next, as evidence mounts the Morrison government's personal income tax cuts are not being spent by cautious consumers who are trying to get on top of their mortgages.

The IMF believes the Australian economy will grow by just 1.7 per cent this year, making it weaker than the economy of Greece, which has gone through several years of depression. Twelve months ago the fund tipped Australia to expand by 2.8 per cent through 2019.

It's part of a broader slowdown, with the global economy now expected to grow by 3 per cent, its worst performance since the global financial crisis of 2008-09.

The Australian economy is tipped to lift in 2020 but with growth forecast to be 2.3 per cent – half a percentage point lower than what the IMF tipped in April and well short of federal budget forecasts.