Australia's resources boom is set to grow as Asian economies lead the global economic recovery, the country's central bank said Friday as it lifted growth forecasts.
The Reserve Bank of Australia (RBA) said resources-driven exports had held up during the financial crisis and had been buoyed by strong expansion in the mining sector.
The bank lifted its growth forecast for 2009 from 0.5 percent to 1.75 percent and raised estimates for growth in the 12 months to fourth-quarter 2010 from 2.25 percent to 3.25 percent.
"Investment in the resources sector is at historically high levels and is expected to increase further, particularly as the LNG (liquefied natural gas) sector expands," it said.
The RBA said China and India were driving the global recovery and Australia owed its performance as the only major Western nation to avoid recession to a "strong bounceback in Asia, particularly in China."
"Asia is at the forefront of the global recovery," it said.
"The region's financial systems have not experienced the same dislocation as elsewhere, and the economies are benefiting from a recovery in domestic demand, underpinned by stimulatory settings of both monetary and fiscal policy."
"Growth in China and India has been particularly strong," it added.
Australia enjoyed a decade of stellar economic growth, underpinned by intense demand for resources from fast-industrialising China and India, until the global financial crisis.
RBA Deputy Governor Ric Battellino later said the country's growing links with China would provide a platform for future prosperity.
"Our economies are becoming very intertwined," he said.
"Australia will most likely face an extended period of prosperity in the years ahead. Some of this will come about through strong real economic growth due, for example, to increased investment and higher export volumes. Some of it could also come via high commodity prices."
The central bank warned that the global economy faced "significant risks" as stimulus measures were withdrawn, leaving uncertain the "durability of the pick-up in growth".
"Banking systems in a number of countries are still some way from full health and further bad news in the financial sector cannot be ruled out," it said, though it assessed prospects in Asia as "noticeably better".
In September, the government gave the go-ahead to the country's largest ever resources project, the development of the Gorgon LNG field, which is underpinned by supply contracts with China, Japan, India and South Korea.
Treasury chief Ken Henry recently foreshadowed a "decades-long" return to a commodities boom on unprecedented need for power and materials.
The world's biggest miner BHP Billiton in September said it expected growth in China to fuel the new surge, with global steel requirements to double in 15 years.
Both India and China would drive a 40 percent surge in demand for energy, with the two nations expected to account for over half the world's incremental electricity demand, BHP said.
RBA board member Warwick McKibbin said the global slump appeared to have been "overstated", with indicators showing it was now "unlikely anything is going to go wrong in the global economy".
McKibbin said "at least a dozen factors" had helped Australia dodge a recession, including labour market and exchange rate flexibility and strong regulatory systems.
"It wasn't just China that caused Australia not to have a recession," McKibbin said.
The bank hiked interest rates by 25 basis points for a second successive month to 3.50 percent this week, after becoming in October the first advanced economy to raise them since the global financial meltdown.
It said Friday a "further gradual lessening of monetary stimulus is likely to be required" if the economy remained buoyant, raising expectations of a further rise in coming months.
-- Dow Jones Newswires contributed to this report --
