Australia getting used to sub-trend growth

Real GDP growth in Australia was sub-trend in the fourth quarter of 2014, despite household spending, inventories and net exports all contributing. 

The national accounts release for the December quarter showed that gross domestic product expanded by 0.5% qoq to be up 2.5% yoy through the year. 

This result was weaker than market expectations in a quarterly sense, but in line on an annual basis due to slight upward revisions in previous quarters. It was also in line with the RBA's expectation as printed in the Feb Statement on Monetary Policy. 

BofA Merrill Lynch notes in a report on Monday:

• Growth in Australian economy was again soft in 4Q despite a solid contribution from consumers, inventories and net exports. The decline in resources investment weighed again and will continue to do so. 
  
  
• Nonetheless, this sub-trend rate of growth was in line with the RBA's expectations and will likely to continue to be so. We expect that it will cut rates again over coming months.