Chalmers says global economic turmoil will drive budget cuts, but Australia should avoid recession

Treasurer Jim Chalmers has warned of "very substantial and intensifying" economic pressures on the horizon but insists he’s not planning for a recession, as he prepares to find new ways to cut the budget ahead of its mid-year update.

On Sunday, Chalmers called on critics of government spending to specify which services should be cut, while attributing rising inflation in Australia to the private sector amid the ongoing conflict in the Middle East. He stated that the US-led eight-month war against Iran has severely curtailed global oil supplies, which has been "disastrous" for cost-of-living pressures.

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"No serious observer of what’s going on right now would conclude anything other than [that]," Chalmers told ABC’s Insiders. "The longer this thing drags out, the bigger the impact on the global economy and on the Australian economy, whether it’s … on inflation or downward pressure on growth."