Economic growth in China and other Asian nations over the coming decades is expected to underpin the prospects for Australia's economy, the central bank says.
Reserve Bank of Australia (RBA) assistant governor of economics Philip Lowe says Australia is in a stronger position than any other advanced economy after emerging from the global downturn in better than expected shape.
"Risks of course remain, both in the advanced economies and in Asia," he told a Committee for Economic Development of Australia (CEDA) half day forum in Sydney on Thursday.
"But the central scenario for Australia over the next few years remains a positive one, with the challenges that we are likely to face being quite different from those facing the other advanced economies."
Growth in the world economy had been uneven, with most advanced economies having a weak recovery while Asia rebounded far stronger, Dr Lowe said.
He said the "two-speed" world presented an absorbing backdrop for the Australian economy.
"There remains some risk that developments in the advanced economies could again derail growth in the global economy," he said.
"But the more likely scenario remains a relatively subdued recovery in the advanced economies and stronger growth in Asia, with domestic demand in the region making a greater contribution to growth than has been the case historically.
"If this is how things play out, the Australian economy is well placed."
About 70 per cent of Australia's exports go to Asia.
On-going growth in cities in China, due to the migration of workers from the countryside and subsequent investment in infrastructure, will benefit Australia's economy, Dr Lowe said.
"I am quite optimistic that story has some decades to run and that underlies much of the positives for the Australian economy," Dr Lowe said in response to a question at the half day forum.
"There are clearly going to be some up and downs in the size of Chinese investment, and that will have an affect on us.
"For the next 20 years, on average, it is going to be a good 20 years for China and for us." China is Australia's largest export market.
The value of exports to China increased by around 840 per cent in the six months to December 2009, from the corresponding period in 1999. Dr Lowe said suggestions of an end to the boom in major capital building in the world's most populous nation was unlikely.
"Somehow that China is overdone with capital investment, I think that is a bit of a stretch," he said.
"They can go for many years."
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