Colin Brinsden
(Australian Associated Press)

Annual economic growth has perked up slightly, backing Reserve Bank governor Philip Lowe’s view that Australia has reached a “gentle turning point”.

The latest national accounts released on Wednesday showed the economy expanded by 1.7 per cent in the year to September compared to a previously reported 1.4 per cent as of June.

“The economy has continued to grow, however the rate of growth remains well below the long run average,” Australian Bureau of Statistics chief economist Bruce Hockman said.

Quarterly growth was weaker than economists had expected at 0.4 per cent after an upwardly revised 0.6 per cent in the June quarter.

The central bank left the official cash rate at a record low 0.75 per cent at its monthly board meeting on Tuesday.

After the meeting, Dr Lowe said the economy appeared to have reached a “gentle turning point”, believing that growth will lift to around three per cent in 2021.

However, financial markets still believe there is a 50/50 change the Reserve Bank will be forced to cut the cash rate to 0.50 per cent in February after the board’s summer recess.

Three interest cuts and personal income tax reductions this year have failed to give the economy a major boost.

“The reduction to tax payable did not translate to a rise in discretionary spending, which led to a visible impact to household saving,” Mr Hockman said.

With household sector remaining subdued, the main contributions to growth in the quarter came from exports and government spending.