Australia could be set for a decades-long commodities boom fuelled by rocketing demand from China and India, a senior official said in the country's latest upbeat economic assessment.

Treasury secretary Ken Henry also said a return to full employment was a "conceivable possibility" in the coming years, with major export partners showing unexpected resilience despite the global downturn.

"It now appears the impact of the global financial crisis on the Chinese economy and the Indian economy hasn't been nearly as large as many feared," Henry told a Senate hearing late Wednesday.

"It seems that's likely to support relatively high commodity prices, that is prices for Australian export commodities, for a considerable period of time, quite possibly for some decades."

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.

But the world's biggest miner BHP Billiton in September said it expected growth in China to fuel a new boom over coming decades, with global steel demand 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.

The two countries this year signed liquefied natural gas (LNG) supply contracts worth tens of billions of dollars from Australia's massive Gorgon gas field.

Prime Minister Kevin Rudd said the Gorgon project, Australia's largest-ever resources development and the world's largest LNG plant, was expected to generate A$300-billion in export earnings.

China was Australia's number two trading partner in 2008, recording two-way trade worth A$73.93-billion, up 13.3 percent on the previous year.

Iron ore comprised more than half of Australia's A$32.48-billion in exports to China.

Australia's government and central bank have cited trade links with China as a main reason for its success in weathering the global financial storm as the fastest-growing economy in the developed world.

Australia is the only major Western nation to avoid a recession in the worldwide slump and posted growth of 0.6 percent in the three months to June — the best in the developed world.

This month it became the first advanced economy to raise interest rates since the credit meltdown and promised more rises to come, boldly declaring the risk of recession over.

China on Thursday posted 8.9 percent growth for the third quarter, its fastest pace in a year and keeping it on course to meet government targets of eight percent growth for 2009.

The recovery of the world's third-largest and fastest growing major economy is seen as vital to dragging the United States and Europe out of the worst crisis in 80 years.

AFP

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