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Economic growth sluggish

The economy is expected to have improved at the end of 2014 but is still growing at a sluggish pace.

Economic growth is forecast to have lifted to 0.7 per cent in the December quarter, taking it to 2.6 per cent for 2014, according to an AAP survey of 16 economists.

That would be an improvement from 0.3 per cent in the September quarter, the slowest rate of growth for gross domestic product (GDP) in three-and-a-half years, and an annualised growth rate of 2.7 per cent, seasonally-adjusted.

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The latest figures are due to be published on Wednesday.

ANZ co-head of Australian economics Felicity Emmett says growth in the December quarter will mainly be driven by mining exports.

However, weaker export prices relative to import prices – known as terms of trade – are a drag on growth.

“We have recently revised down our commodity price forecasts, and the lower terms of trade will continue to weigh on profits, investment, wages and public demand over the next few years,” she said.

“We expect the terms of trade fell again in the fourth quarter to be back around 2008 levels.”

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