Australia is not facing a recession but the global financial crisis will impact its economy, which has enjoyed more than a decade of strong growth, Assistant Treasurer Chris Bowen said.

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While the financial turmoil that has battered global markets and economies threatens to throw the world into a deep recession, Australia is expected to emerge from the firestorm in better shape than many countries, he said.

"If you look at all the analysis, not only by us, not only by the government and the Treasury, but also by the IMF (International Monetary Fund) and the World Bank, they indicate that Australia will continue to grow," he said.

"We will be affected, we will see this crisis of confidence in the financial markets affect the real economy, the things that we all do every day, but all the evidence is that Australia will continue to be robust and will continue to grow," he told the Fairfax Radio Network.

The International Monetary Fund noted that while many developed economies were headed for recession, Australia's growth was predicted to be about 2.2 percent next year, he said.

In better shape then most

Prime Minister Kevin Rudd and Treasurer Wayne Swan have said the economy is in better shape than most to weather the crisis as it boasts sound regulation and strong surpluses that are helping cushion the blows.

"I believe that the purpose of having a surplus is to make sure you've got a buffer for the tough times and the tough times have come," Rudd told reporters. 

"That means making sure you're taking necessary measures, all necessary measures, to contribute to positive economic growth in the future," he said, adding that his government is considering "practical measures" to bolster growth.

Bowen's warning

But Bowen warned that Australia's relative economic security did not make Australia immune from the crisis.

"We are well armed, but we are not bullet-proof. But if we all keep our eye on the fundamentals of the Australian economy there is no need to be overly panicky or overly concerned," he said.

Rudd on Sunday guaranteed deposits held in Australian financial institutions for the next three years and guaranteed the borrowings of Australian banks in international credit markets in order to bolster confidence in the country's financial system.

The country's stock market soared by more than five percent on Monday following the move, already undertaken by such countries as New Zealand and Ireland and which other economies could follow.