Investing in Australia.
Having entered its 28th year of consecutive economic growth, increasing more than 3% average each year since 1992; Australia has set the record among new developed economies for uninterrupted expansion. “In an uncertain world, Australia remains a safe and secure place to invest and do business” – (Commission, 2019)
Australia is also the only developed economy to record no annual recessions from 1992-2018, its economy is sustained via solid policy frame works, strong institutions, an attractive investment environment and deep trade ties with the Asia region.
The standard of living compared to the cost of living attracts many to the country, Sydney ranks 10th, Melbourne 16th and Perth 21st in Mercer’s 2018 Quality of Living Rankings. These three cities top the rankings across the Asian region, above Singapore (25th), Tokyo (50th), Hong Kong SAR (71st), Shanghai (103rd), Beijing (119th) and Mumbai (154th).
This Article is based on the Benchmark report prepared by the Australian Government for the year 2019.
- Robust Economy
In a nutshell the economy of Australia is:
- The 14th largest in the world.
- Rated AAA with a stable outlook by all three global rating agencies
- Forecast to realize average annual real GDP growth of 2.7% over the next five years – the highest among major advanced economies
- Characterized by diverse services and technology sectors and low government debt
What makes us say Australia is a growing economy?
The population of the Country only adds up to 0.03% of the population of the world, its economy is fast growing and known to be the 5th largest economy in the Asian Region in 2019. Having an estimated nominal GDP of USD 1.5 trillion, it accounts for 1.7% of the global economy. Statistics further show that the total production value of the country has tripled since 1992.
It should be noted that the deep-rooted trade ties with the Asian Region supports a medium- and long-term steady growth outlook. The economy is dominated by the services sector, which amounts for over 75% of real gross value added (GVA). Further the service sector has expanded by an annual average of 3.6 % since 1992 above the goods sector. Information media and tele communications, professional, Scientific and technical services, financial and insurance services have shown steady annual growth rated of 4.5 % indicating the level of high skill in such sectors.
What is notable is that Australia has a significantly low amount of government debt, predicted to fall to around 15% of the GDP in 2023. Further it was estimated to be below 20% of the GDP in 2019.
- Dynamic Industries
Over a period, Australia has become well known for its advancement in Agribusiness, Tourism and Financial services industries.
In a nutshell Australia is:
- The world’s largest producer of gold, iron ore and uranium.
- A major global producer of agricultural commodities.
- Australia has deep and liquid financial markets, including the world’s sixth largest managed fund assets pool, eighth largest foreign exchange market and ninth largest stock market.
- The world’s third most popular destination for students.
- The seventh largest international tourism market.
Australia is known for its success in Foreign Students, the country attracted more than 623,000 international students in 2017; International education has contributed over AUD 30 Billion to the economy in 2017 ; the country is also known for being the 7th largest for International tourism receipts, among the top 12 in the world for merchandise export in Agricultural products. Further Australia’s Investment fund assets of USD 2.1 Trillion is the 6th largest in the world. Australia is also among the top 03 in the world for merchandise export of Mining and fuels.
The transition to a service-based economy has resulted in Australia being known as a pioneer in the development of new technologies, especially in the fields of agriculture, education, financial services and health. Having over 700 fintech startups, 5000 MedTech companies, 350 EdTech companies and 300 AgTech companies, the service industry drives large sums in investments from around the world.
The Country’s abundance in Mineral and energy reserves contribute immensely to its wealth.
Australia currently possesses the worlds largest resources of iron ore, gold, lead, zinc, nickel, rutile and Zircon, as well as the second largest resources of bauxite, cobalt, silver and copper; the nation also has the largest reserves of uranium and second largest deposit of brown coal making the country a vital resource in meeting the energy needs of the world. The above has resulted in the total resources and energy exports of the country to amount to an estimated AUD 230 billion.
In addition to the above, Australia is a pioneer in the export of fresh and superior quality food specially in the Asian Region; the country is a major global producer of beef , wheat, wool, wine, barley, lamb, raw cotton, sugar, canola, slaughter cattle and chick peas. The total of the food and fiber exports were worth more than 50 billion AUD in 2017; Australia also ranks among the top for solar and wind energy generation, over the past decade the amount of energy generated by wind and solar has grown significantly; accounting for 15% of Australia’s total electricity generation in 2016-17.
- Innovation and skills
Ranked 5th among its peers for global entrepreneurship, and homing a mere 0.3 percent of the world’s population; Australia contributed to over 4 percent of the world research publications in 2016/17; the country’s advancements in the areas of space science, physics, computer science, clinical medicine, engineering and environment, ecology – reflect the country’s diverse research interests.
In a nutshell the Australia is:
- Ranked 5th in the world for global entrepreneurship, with almost half of all Australian firms active in innovation.
- Involved in cutting-edge research, contributing to over 4% of world research publications in 2017 despite having only 0.3% of the world’s population.
- A highly skilled nation, where over 40% of the workforce has a tertiary qualification.
- Culturally diverse and multilingual, where 28% of the population was born overseas and 3.2 million Australians speak an Asian language and 1.4 million speak a European language.
- Global ties
The stable economy of the country over a period of years coupled with its steady growth makes Australia a popular option among business investors.
Nine of the top 10 Fortune Global 500 and eight of the top 10 Forbes Global 2000 companies have operations in Australia, the long standing relationship between Australia and Asia help connect international companies to Asia; further the Free Trade Agreements facilitate the smooth flow of goods, services and investments with major economies across the world.
Australia has an open trading economy where:
- 10 of the country’s top 12 export markets are within Asia and Oceania.
- Two-way trade in goods and services equaled A$763 billion in 2017, which accounted for over 40% of the nominal GDP.
- Foreign investment stock equaled around A$3.6 trillion
- Inward foreign direct investment stock reached A$849 billion in 2017.
Strong ties with the Asian markets keep growing at a steady rate of 7% since 2007 and accounted for around two thirds of Australia’s total trade.
A top 10 destination for foreign direct investment – In 2017, Australia was the eighth largest recipient of FDI inflows, up one place from 2016. From 2011–17, Australia’s average annual FDI inflow was US$47 billion, compared with an annual average of US$28 billion over the previous seven years (2004–10). This represents a growth rate of 70 per cent over the two time periods, which raised Australia’s share of global FDI inflows to 3 per cent from 2011–17, compared to 2.2 per cent from 2004–10. Australia currently has 11 free trade agreements (FTAs) in force with 18 World Trade Organization members. The countries covered by these FTAs account for almost 70 per cent of Australia’s total trade.
- Strong foundations
The stable operation of democratic institutions and sound governance; which is ranked amongst the best in the world, and robust rule of law and low level of corruption provides assurance for multinational companies considering Australia as a base from which to launch operations in to the Asia Region and further facilitates vibrant entrepreneurial development.
In a nutshell the country is:
- A welcoming place to live and work, with six cities ranked in the global top 40 for the quality of living.
- Equipped with a strong judicial system and strong control of corruption.
- An environment that is ranked in top 20 out of 190 countries for ease of carrying out business.
- Ranked third by the United Nations Development Programme for Human Development.
- Placed in the top 10 for enforcing contracts, 5th in getting credit, and 8th in dealing with construction permits.
The stable economy in Australia has enabled the country to secure the fourth largest pension in the world, valued at USD 19 trillion; the country is also rated among the most business-friendly economies and has one of the world’s most robust regulatory environments.
The cost involved in a prime office space in Melbourne, Brisbane and Perth is inexpensive relative to Beijing, Tokyo, New Delhi, Shanghai, Seoul and Singapore, and less than a quarter of the cost of Hong Kong and London.
Office space in Sydney’s CBD is a third of the cost of Hong Kong SAR (Central) and around half the cost of New York (Midtown Manhattan) and London (West End).
Feel free to do your own research, you can download the Report here.
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