Pressure is mounting on the Reserve Bank to slash interest rates in coming months after new figures revealed Australia's economy grew at a sluggish pace in 2014.
Economic growth was a below-average 2.5 per cent last year, official figures released on Thursday showed.
While the result was in line with RBA and Treasury forecasts, it fell well short of the three per cent or above rate both organisations expect for the coming financial year.
The figures showed that while the housing sector and household spending are bouncing back, non-mining business investment is still weak.
Economists are predicting the RBA will cut the cash rate once to twice more in coming months in an attempt to fire up the economy.
JP Morgan economist Ben Jarman said there seems to be no signs that economic growth will lift soon.
"Growth isn't that weak in annual terms, but has been below trend for an unacceptably long period, requiring a further nudge from the RBA at some point," he said.
The RBA on Tuesday kept the cash rate unchanged at 2.25 per cent after reducing it to a new record low in February.
But it has clearly flagged that it is looking to cut it again to boost growth.
Mr Jarman expects that the next rate cut will be in May.
"We had thought last week's survey of capital expenditure intentions showing that the prospective pick-up in non-mining business investment is far from compelling, would trigger another cut this week, but it seems RBA officials were uncomfortable with back-to-back moves," he said.
AMP chief economist Shane Oliver said more interest rate cuts are necessary to boost business and consumer confidence.
He said while rates were at record lows, they weren't generating the same response they used to.
"This reflects more cautious attitudes to debt, the difficulty in turning non-mining related activity up again after it was suppressed through the mining boom and the fact that the Australian dollar has been very high until recently," he said.
He expects two more rate cuts from the RBA and the Aussie dollar to fall to around 70 US cents by the end of 2015, both of which should help the economy.
Commonwealth Bank senior economist Michael Workman said the GDP data showed some signs of life in the non-mining parts of the economy, but those sectors still have a long way to go.
"Consumer spending looked to be a little bit stronger than a lot of people thought and also residential construction," he said.
"Annual growth of 2.5 per cent is still well away from where it needs to be, which is closer to three per cent or a little bit over three per cent, and it will be a while before the unemployment rate peaks."
Mr Workman isn't that confident economic growth will significantly strengthen this year, saying another one or two interest rate cuts are needed within months to boost growth.
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