The Australian economy is emerging progressively from the slump caused by natural calamities and a severe shoot up in interest rates at the end of 2010.

In a monthly survey, the National Australia Bank (NAB) showed the improved conditions of the various businesses in March after it had deteriorated due to the Queensland floods. The improvement has obtained the highest level in a year despite confidence level was thumped.

The survey further showed confidence level of manufacturing and tourism business, which are directly exposed to the Australian dollar, continued to wilt down. The mining sector, on the other hand, continued to soar, with bulk commodity prices at record levels.

NAB's index of business conditions mounted 11 points to an index reading of positive 9. The bank's index of business confidence was chopped down by 5 points.

NAB reported that the progress in the business conditions has been driven by increase in the sub-measures of trading conditions and profitability.

NAB anticipates a 2.5 per cent growth this year in the Australian economy, which will soon accelerate to 3.7% in 2012. Unemployment which is currently at 4.9 per cent, is expected to drop to 4.5 per cent by 2012.

According to the Reserve Bank of Australia, the outlook means a rise in the cash rate target, now at 4.75 per cent, towards 5 per cent in August, with a second increase likely in November, NAB declared.