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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 upped 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 bank said the giant economies of 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.
The central bank warned that the global economy faced "significant risks" as stimulus measures were withdrawn, leaving uncertain the "durability of the pick-up in growth".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.
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".
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 rates 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 rate rise in coming months.
-- Dow Jones Newswires contributed to this report --
