The NSW economy has shrugged off its tag as the nation's economic laggard and is set to buttress Australia as it makes the difficult transition from the mining boom.

One of the nation's biggest banks, ANZ, predicts the premier state will be ''central'' in leading the national economy as it becomes more reliant on the non-mining sectors over the next few years.

"It's now very much about NSW leading the national economy." Warren Hogan, ANZ Credit:Shane Eecen

For most of the past decade NSW grew much more slowly than other states but it now shows signs "of genuine recovery and is now outperforming the rest of Australia'', ANZ's report says.

This contrasts with the more negative outlook in the mining states and Victoria, where slower housing construction is likely to weigh on growth.