Australia has reported a slowdown in economic growth, as the country struggles with a severe drought.

The economy expanded by just 0.3% in the three months to September, compared with the previous quarter, the slowest rate in more than three years. Australia's key crop production fell by more than a third during the quarter, hit by the worst drought in a century. However, mining-led exports helped keep the economy growing, despite an overall drop in business investment.

"In the period ahead, growth is likely to remain modest, reflecting the effects of the severe drought," said Australia's finance minister Peter Costello. The Reserve Bank of Australia last month warned that the national drought was likely to slow economic growth, as a result of a drop in farming output. It predicted that the drought would cut annual economic growth from 1.9% to 1.15%.