The mining sector has saved Australia’s bacon yet again, following the announcement of a modest return to economic growth in the latest quarter.

Alas, the ShadowLands’ bold new year’s prediction that Australia could be heading for a technical recession will not come to fruition, although our bearishness was perhaps closer to the mark than we saw from some of the professional forecasters going into 2011. Considering the massive mining boom that is currently going on, the Aussie economy is still very sluggish.

For all of that, we were never quite as bearish as one Philip Bowring of the International Herald Tribune who, we have noted here before, has been predicting the downfall of the Australian economy for years.

If he had predicted the demise of just about any other economy in the world over the last 10 years, he would have been right, but the Aussie economy remains one of a handful that has kept out of trouble.

Only last year, Phil had this to say:

So if ever there was a sell in sight it is the Aussie at 90 cents, and shares in the self-congratulatory Aussie banks.

Phil went on to predict a collapse of the Aussie dollar to as little as US 48 cents. It turns out the Aussie dollar is now more than double that, while the share prices of the Australian banks have been fairly solid, so the improving exchange rate would have made them a profitable investment for his Asian readers. In fact, somehow Bowring has managed to pick out amongst the most solid investments anyone could have made during the GFC.

Since Phil wrote about it, Australia’s current account deficit has improved significantly and there has been a remarkable turnaround in the level of household debt. Whether it is because of the global downturn, or because of a lack of confidence in the Government, Australians have started saving, big time. This may yet prove to be important if things go pear-shaped.

As always, the key to it all is the continued prosperity of China, but in the meantime, Australia’s economy continues on its charmed run. Perhaps a bigger question is, what are we doing to ensure we will be okay when the mining boom comes to an end?

There is a thoughtful article here on the subject of the Chinese economy, (thanks to JM Heinrichs).