Sydney

AUSTRALIA is likely to have a period of below-average economic growth as it undergoes a "major transition", though a weaker currency and policy support will cushion the impact, central bank governor Glenn Stevens said.

"The massive run-up in resources sector capital spending that was a natural response to earlier very high prices is reversing, causing a drag on demand," Mr Stevens said in the text of a speech on Friday in Melbourne. "The decline in the exchange rate is assisting the transition. But we have always said we cannot hope to fine-tune this transition."