"The latter is likely to reduce the competitiveness of import-competing activities and non-mining exports, unless productivity in these activities can be improved," the WTO said in its first Australian Trade Policy Review since 2007.

"This will have far-reaching implications for the pattern of growth and structure of the economy by necessitating a reallocation of domestic resources," it added.

"Significant structural adjustment by the non-mining economy will be required." The WTO said Australia's "reliance on short-term external debt, and the high and growing indebtedness of households" were also downside risks. Its "growing but ageing population, climate change and technological change" were among Australia's longer-term challenges, the WTO added, urging Canberra to review its trade policies.