-Matthew Circosta, economist at Moody's Analytics
The Australian economy experienced a tepid growth in the fourth quarter, marking the slowest annual pace of growth last year, adding to the case of further RBA actions in the coming months to revive the economy. Fourth-quarter gross domestic product rose 2.5% from the year-ago period, following the 2.7% growth in the preceding quarter, the Australian Bureau of Statistics reported. Measured on a quarterly basis, the economy expanded 0.5%, a slight improvement after growing 0.3% in the three months through September. The main catalysts to the growth appeared to be net exports, which contributed 0.7 percentage points, and final consumption expenditure that added 0.6 percentage points. However, this was offset by a drop in inventories and non-dwelling construction. The data came a day after the Reserve Bank of Australia refrained from adding further monetary stimulus following a 25-basis-point interest rate cut last month. The official cash rate now stands at all-time low of 2.25%.
Separately, a report showed that the Australian services sector improved for the first time in 12 months in February, raising hopes that stimulus measures have started to help the economy. The Australian Industry Group Services Index jumped to 51.7 in February from 49.9 a month earlier, breaking through the important 50-mark threshold, which separates growth from contraction.
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