Australia's economic growth momentum remains on the upturn until the year 2011, the National Australia Bank's group chief economist Alan Oster said today.

However, much of its progress will still be hinged on investments coming from the private sector as the Australian government takes a weaker role in fuelling domestic expansion, according to NAB's latest global and domestic analysis given to clients.

NAB's forecast is a 25 basis points increase to 3.25 percent and 3.5 percent economic growth in Australia in 2010 and 2011.

"The NAB Survey (forward orders, capacity utilisation and stocks) has recommended that the domestic sector is s starting to turn around, but still soft. We are still waiting to see full impacts of resurgent mining boom. After false start in October, RBA likely to increase rates before Christmas," said Oster.

He noted that the key issue in the near term that remains a question is "whether private sector investment will come to the rescue of the dwindling fiscal stimulus in time to prevent a growth slowdown

The NAB said the resurgent mining boom will be the critical driver of growth over the next two years, although the Reserve Bank has not taken a clear action and "are still waiting nervously to see the "whites of its eyes."

Global recovery

NAB sees the global recovery to hit at a slower pace in 2011 to 4.4 percent from ane estimated 4.6 percent growth seen by the end of 2010, attributing the adjustments in fiscal policies taken by emerging economies

Treasurer Wayne Swan's reading of the global recovery: "The global recovery is patchy, it's uneven, and it's uncertain.

He said global economic leaders are now faced with the challenge of not just pushing growth within and among economies, but how it can be sustained in the long term.

"Currency reform is an important element of this reform agenda, but it is not the only issue," he said. World leaders failed to meet halfway as to how the recent form of currency manipulations can be abated that may prompt a trade war.

The challenge for the global economy is "to lift growth, not just shift growth," he said after weekend meetings with world finance chiefs in Washington, where officials clashed over exchange-rate policies in emerging markets..