Australia's economy lost pace in the second quarter of 2014 after a sharp fall in exports saw growth expand by just 0.5% following a strong start to the year, data showed today. 

Annual growth was 3.1%, figures from the Australian Bureau of Statistics said, compared to a year-on-year expansion of 3.5% in the first-quarter.

Growth had soared to 1.1% in the three months to March. Analysts had expected a slightly softer reading of 0.4% for the second-quarter to take growth for the year-to-date to 3%. 

The slower growth rate was mostly driven by a fall in net exports, which declined by a seasonally adjusted 0.9 percentage points in the three months to June.

Inventories supported growth in the quarter, adding 0.9 percentage points, while final consumption contributed 0.3 percentage points. 

The softer figures had been flagged by the Reserve Bank of Australia, which yesterday decided to keep the cash rate on hold at a record low of 2.5% for its 12th meeting in a row. 

The central bank has sought to maintain an accommodative monetary policy as the country moves away from a mining investment boom that has helped the economy avoid recession for more than two decades.