The global economy is suffering the lowest growth rate in almost two decades and casting a shadow over the upcoming federal budget, the treasurer warns.

Jim Chalmers said it was the weakest global growth in years aside from the depths reached during the global financial crisis and the COVID-19 pandemic. 

Dr Chalmers, who recently returned from talks in Washington with other financial leaders, said the budget for 2022/23 would be handed down under difficult conditions.

“The uncertainty and volatility in the global economy will be a really key influence on the budget that we hand down in May,” he said in Canberra on Monday.

Dr Chalmers said the government would aim to strike a balance between fiscal restraint and cost-of-living relief measures to ease the pain of still-high inflation.

This will include energy bill relief and possibly more support for single parents, as is likely to be recommended by a key economics advisory committee.

But he did not confirm whether the increase to the relevant welfare payment would feature in the budget.

The government also plans to bank the majority of the extra revenue flowing into its coffers from high commodity prices and low unemployment, as it did in October. 

This will help improve the structural position of the budget at a time when it is under pressure from unavoidable spending on health, defence, the NDIS, aged care, and interest payments on government debt.

Dr Chalmers said the budget would absorb “most” of those revenue upgrades but not quite 99 per cent over the course of the next four years.

“There’s good reason for that, and that’s because of the balance that we have to strike as the economy slows,” he said.

Dr Chalmers said he had also accepted advice from Treasury on changing assumptions on commodity price estimates for the budget.

Estimates for commodities such as iron ore had been set at very conservative levels over the years compared to actual market prices.

Dr Chalmers said while there were “good reasons” to still keep estimates conservative, he would go with the Treasury’s “moderate” changes.

“They have a pretty firm view and a clear view that the time is right to change those assumptions,” he said.

The treasurer also commented on the upcoming release of an independent review of the Reserve Bank and confirmed legislative approval would be needed to pass some of its recommendations.

He called for bipartisan support on the reforms and commended shadow treasurer Angus Taylor’s willingness to cooperate on the matter.

Mr Taylor agreed that crucial improvements to the central bank should be “above politics” and that he would work with the government on sensible proposals.

“We need a credible, capable, effective Reserve Bank,” he told Sydney radio 2GB. 

By Andrew Brown and Poppy Johnston in Canberra