13 Jul 2021
The Australian Trade and Investment Commission (Austrade) has updated 15 charts in the Why Australia Benchmark Report.
The Benchmark Report June 2021 Update includes the latest data on Australia’s:
- robust economic performance compared to global peers
- impressive resources and energy export performance to June 2020
- recovering domestic tourism sector
- resilient financial markets
- continued growth in foreign investment in 2020.
Here are 10 updates from the Benchmark Report June 2021.
Australia is still on track to be the world’s 12th largest economy
Lockdowns drove the Australian economy into a record contraction. Australia’s early success in controlling the virus, however, is underpinning an economic recovery that is stronger than many other countries.
The Australian economy is still on track to become the world’s 12th largest economy in 2021, up two places from 2019, according to the International Monetary Fund’s April 2021 Update. Australia’s economy is now larger than Brazil’s and close to equalling Russia. This is a remarkable achievement just over 12 months after the start of the COVID-19 pandemic.
COVID-19 had minimal impact on Australian GDP
By April 2021, Australia combined a low fatality rate with a low impact on GDP, relative to most other countries. Australia’s GDP was 2.4% lower in 2020 than in 2019. This decline was far smaller than the average rate of –4.7% across advanced economies.
Australia has low government debt by global standards
Australia’s public sector debt is also in a good state. In its April 2021 ‘Fiscal Monitor’ report, the IMF estimated the Australian Government’s net debt would be 54% of GDP in 2022. This is well below the 94% average forecast for advanced economies.
Australia’s proximity to Asia to benefit its trade
Australia’s economy benefits from the country’s strong trade ties with Asia. Most of our major export partners are in the Asian region. We have 11 bilateral and multilateral free trade agreements with markets in Asia and Oceania. With Asia’s share of global GDP projected to reach almost 45% in 2026, Australia is in a good position to reap the benefits.
Australia’s resources and energy exports hit new high
Asia is a major buyer of Australia’s resources and energy products. Following a surge of over 20% in 2018–19, exports of these two commodities increased by 3% to A$291 billion in the year to June 2020. Our resources and energy exports are projected to hit another new record of A$310 billion in 2020–21.
Domestic tourism sector begins slow recovery
Australia’s tourism industry has continued to recover following the unprecedented shock presented by COVID-19. At its lowest point in April 2020, domestic overnight trip spend fell by over 90%. Despite this, the industry has shown remarkable resilience.
Australian tourism is underpinned by strong domestic demand. In 2019, more than 77% of total tourism spend came from the domestic market. With international borders remaining closed, domestic tourists have played a pivotal role in tourism recovery.
In April 2021, spend on domestic overnight trips reached A$8.2 billion, a 7% increase compared to April 2019. While this is a positive result, the fluctuating nature of the pandemic will continue to impact tourism performance.
The Australian financial sector remains resilient
Australia’s economy is underpinned by its sophisticated and significant financial sector. In 2020, we had the world’s seventh largest pool of managed funds and ninth largest stock market. Our foreign exchange and debt markets are both ranked 10th in the world.
As a percentage of GDP, Australia’s total value of all financial assets rose to A$10.2 trillion (almost US$8 trillion) in the December 2020 quarter. This equates to more than five times the value of our GDP.
Foreign investment in Australia continues to grow
Foreign investment in Australia was depressed by drought, bushfires and lockdowns in 2020, but still grew by 2.5%.
The latest Australian Bureau of Statistics figures show total stock of foreign direct investment (FDI) in Australia has risen, on average, by about 8.0% per year since 2000, reaching A$1 trillion around 2020. Other forms of investment – including portfolio investment – grew by 8.4% per year, taking total foreign investment to A$4 trillion.
As a percentage of GDP, the total value of foreign investment stock grew from 120% in 2000 to 203% in 2020.
Australia attracts FDI from around the world
Australia attracts investment from around the world. Our top three overseas investors are the US, Japan and the UK, with holdings equivalent to 19%, 13% and 12% of total FDI in Australia respectively. The European Union (excluding the UK) holds 10.9% of total FDI in Australia.
Capital inflows increase from Asia
An important recent trend is the solid rise in capital inflows from Asia, albeit from a low base. Since 2010, investment from ASEAN economies have been grown by an average of 9% per annum to almost A$60 billion in 2020. This group was the fourth largest source of FDI in Australia. Over the same period, FDI from Korea grew by 15% per year; China by 13%; Canada by 12%; and Hong Kong SAR by 10%.
Access the Benchmark Report 2021 to see detailed charts and analysis, and to download the Report.