Australians should brace for the not-so-favourable business trends to remain in place for a longer period of time, a Treasury official warned on Tuesday.

David Gruen, executive director of Treasury's Macro-Economic Group, said that the challenges facing industry such as the strong Australian currency and low-cost competition in Asia which has battered the country's manufacturing sector are expected to remain further.

He also said that the slowdown in consumer spending and an increased preference for online commerce would likely be in place. While these business trends may hurt affected workers, he said it could also benefit the domestic economy.

"It is largely the decisions made by individual firms in the Australian economy, and the interaction between them, that will drive productivity growth over coming decades," The Sydney Morning Herald quoted Mr Gruen's address at a Melbourne conference.

"Part of the challenge is to allow the pressure currently facing firms in many parts of the economy, due to the high exchange rate and other forces, to encourage the take-up of new technologies and work practices, and to allow resources to move to more productive uses," he explained.

Mr Gruen said that Aussie firms must adapt to the currency's strength and improve efficiency to survive the current slowdown in the economy. In the past 10 years, the Australian dollar has appreciated about 80 per cent due to high Chinese demand for commodities, particularly coal and iron ore.

In pushing for a boost in productivity, Mr Gruen pointed out the management practices in Australia lag behind top performers such as the U.S., Germany, Sweden, Japan and Canada. In terms of productivity, he said Australia is similar to that of France, Italy and the United Kingdom.

The Treasury official echoed similar calls made earlier by the Reserve Bank of Australia for an improvement in productivity to boost living standards and maintain low inflation.

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