Australia's economy expanded 0.5% for the quarter ended in June, lower than a strong 1.1% growth rate in the previous quarter, as the country imported more amid lacklustre domestic spending.
The 0.5% growth reported by the Australian Bureau of Statistics (ABS) was however better than economists' estimates for a growth of 0.4%.
Private gross fixed capital formation and final consumption expenditure contributed 0.3 percentage points each to quarterly gross domestic product (GDP) growth, and changes in inventories contributed 0.9 percentage points.
Meanwhile, net exports negatively affected the GDP by 0.9 percentage points. Imports rebounded in the second quarter, while exports volumes declined slightly. In the second quarter, terms of trade, the ratio of export prices to import prices, declined by 4.1%.
GDP improved by 3.1% in the second quarter over the same period last year, compared economists' estimates of 3.0%.
There was "real and building momentum in the Australian economy," though there are "still challenges that need to be met," according to Treasurer Joe Hockey.
Australia's mining boom, which helped the country avoid big shocks during the global financial crisis, is slowing due to lower commodity prices. Investment in the key sector has decline in recent times.
In addition, the country's strong currency is hurting growth further.
Reserve Bank of Australia (RBA) governor, Glenn Stevens, said he expects economic growth to be a little below trend over the year ahead, despite the lower interest rates in the country. The RBA had earlier cut its growth forecast for full year 2014 to 2.5%.
The central bank is unlikely to cut interest rates now, and they are expected to stay at record lows of 2.5% in 2015, according to economists.