The Reserve Bank of Australia has revised its estimates for economic growth and issued a warning of the need to avoid a sharp slowdown in the months ahead.
The bank said on Monday that growth in domestic demand had moderated significantly in recent months and it expects the local economy will "remain below trend for some time" given the weakness in the global economy.
It now expects annual GDP growth of 1.5% to December 2008, 1.5% to June 2009 and 1.75% to December 2009.
The new estimates compare with its previous forecast of 2%, 2.25% and 2.5% respectively.
Three cuts have been made to the official interest rate since September, leaving the cash rate at 5.25%.
Markets believe the rate could be lowered to 3.5% by the end of June next year.