CREDIT ratings agencies have put Treasurer Scott Morrison on notice, warning they won’t accept unrealistic forecasts in next week’s budget update.

It comes after last week’s national accounts data showed Australia has just come through its worst three-month period of economic growth since the Global Financial Crisis.

Moody’s senior vice president for sovereign ratings Marie Diron told The Australian the ratings agency would be looking at the savings measures proposed at next Monday’s midyear economic and fiscal outlook and the likelihood of them being passed under the current Parliament.

S&P Global Ratings has already put Australia’s AAA credit rating on “negative watch” amid concerns Parliament would be unable to pass savings or revenue measures.

It’s expected there will be some decline in the outlook after the national accounts figures showed a 0.5 per cent decline in the nation’s economic growth in the September quarter.

Ms Diron said Moody’s expected combined federal and state debts to rise from 38.8 per cent of GDP in June to 40.5 per cent next June, a massive rise from $642 billion to $690 billion.

“We expect slower nominal GDP growth that will translate into lower revenue for the government and with not much room for manoeuvre for spending cuts,” she said.

“What we do expect is the continued narrowing of the deficit.”

But the agency does not expect a change to Australia’s AAA rating as it was still in favourable standing compared to other countries with the triple-A rating.

The Treasurer yesterday said government forecasts had been conservative and pointed to the $21 billion in savings measures it had been able to pass since May.

The Government also managed to drive the rate of spending growth from 4.2 per cent to 1.6 per cent with savings measures, he said.