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Australian economic growth still in the slow lane

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Australia has recorded modest quarterly growth, underpinned by a solid contribution from exports and government investment spending.

The economy expanded by just 0.6 per cent in the three months to September, slightly below expectations and the growth rate for the June quarter.

As a result, annual growth slowed to 2.3 per cent, below trend growth of around 3.25 per cent.

Reserve Bank of Australia governor Glenn Stevens said this week sub-trend growth was expected to continue for some time.

He also expressed concern the Australian dollar remained “uncomfortably high”, making domestic exports more expensive for buyers.

But despite a stubbornly high currency, exports contributed 0.7 percentage points to growth in the September quarter.

Government investment spending added 1.3 percentage points to gross domestic product.

However, private business investment spending detracted 1.4 percentage points from growth and business inventories – stock on shelves and in warehouses – subtracted 0.5 percentage points.