Acknowledging reports that the drop in milk prices over a season amounted to $7 billion less in the economy, he said it was a $7 billion reduction out of nominal GDP of $220 billion.
The economy could continue to grow at moderate rates of 2 per cent to 2.5 per cent.
"In respect of dairy farmers in distress, Government have had in place for some time measures for those families that are in severe financial distress," Mr English said "but generally the Government would not be looking to financially support dairy farmers because of low prices".
Mr English also pointed to automatic stabilisers which were providing support to farming and other industries.
The New Zealand dollar was down 25c against the US dollar for the last 12 months, and the overnight cash rate had been cut to 3 per cent and the Reserve Bank had indicated it may fall further.
Mr English also believed that milk prices would not return to the highs of $8 a kilo.
"In fact it may well be not a bad thing because what is evident is that the price going that high has stimulated not just positive supply but probably excess supply."
He said farming was a resilient industry.
"They are not sitting around doing nothing. The way dairy farming works they've got to get up every day and do the calving in the cold wet weather and the mud. So they are getting on with it."
Farmers still had to spend $4.50 per kilo to get the milk into the tanker.
"The issue isn't whether the dairy industry has come to a stop because of low prices; it certainly hasn't. It is a vigorous confident industry. It's an issue of how they finance this year's cash flow."
Mr Guy told reporters at Parliament that what he wanted to hear from banks on Thursday was that they were supporting their farmers "and by and large what I am picking up is that they will".
He said that there would always be mortgagee sales at the margins and that happened even when the milk price was high.
"The important thing to realise is the equity in these farming businesses is very strong.
"I don't see land values softening too much. They may a little bit on the margins but this is more of a cash-flow issue."
Mr Guy said the milk price issue was not just a Fonterra issue.
"The world is awash with milk. This is not an issue for Fonterra. This is an issue for every dairy company and producer around the world. We are seeing farmers riot in the EU."
Labour finance spokesman Grant Robertson said economists had warned of the looming global milk glut and of the tapering off the Christchurch post-earthquake rebuild for well over a year.
"It's a damning indictment on National's over-optimist economic management that they have done nothing to prepare New Zealand for the coming 'shock.'
Westpac today predicted growth to slow, the rebuild to fade and the housing market to slow.
"National's failure to diversify the economy left an economic stool with only three legs of dairy, the rebuild and housing. All three are now being kicked out from under the Government," Mr Robertson said.
"[Prime Minister] John Key and Bill English are in denial...The economy is stuttering and they need to fron up with a plan to get it moving again."
