The Reserve Bank of Australia on Friday cut growth forecasts for this year and next, citing the effects of a weaker housing market.
The central bank said growth would reach 2.5 percent in the middle of this year, well down from the 3.25 percent it previously projected.
Bill Evans, an economist at Westpac IQ, said the Bank's revised forecast contained "some acknowledgement of spillover effects from declining house prices".
The projections for the whole of 2019 and 2020 were also revised down to three percent and 2.75 percent respectively.
The figures fuelled a fierce political debate over the state of the economy ahead of May elections. Prime Minister Scott Morrison's Liberal government has seen years of solid economic growth as its trump card in the run up the vote.
The opposition Labor Party called the latest figures "a major blow to the Liberal Party's claim of good economic management." Morrison brushed aside the revision, saying the projections were "now consistent with our budget forecast".