Australia’s inward FDI stock surged to almost A$850 billion in 2017
15 May 2018
According to the Australian Bureau of Statistics (ABS), Australia’s inward foreign direct investment (FDI) stock reached A$849 billion last year, an increase of seven per cent on the previous year and more than 50 per cent above 2011.
Australia’s economic resilience, together with its strategic location, increased global trade and investment ties, and business friendly environment, continues to position Australia as an attractive investment destination within the Asia-Pacific region.
Australia moved up one spot to eighth place this year, continuing its impressive ranking in the top 10 for the eighth year in a row, according to AT Kearney’s 2018 FDI Confidence Index. The economy expanded by 2.3 per cent in 2017, marking almost 27 years without a recession – a global record. The International Monetary Fund (IMF) has recently upgraded its forecasts for Australia’s growth to three per cent this year, up from the 2.9 per cent rate predicted early this year. The Fund is now projecting that Australia’s real GDP will grow by an average of 2.8 per cent a year between 2019 and 2023 – the highest among major advanced economies, and up from an average growth rate of 2.6 per cent between 2014 and 2018.
As a percentage of gross domestic product (GDP), Australia’s inward FDI stock was 47 per cent in 2017, up from 37 per cent six years ago. Traditional sources of FDI continue to perform well: the United States and the European Union remain dominant sources with total stock values of A$190 billion and A$189 billion respectively. The value of FDI from the US declined slightly by two per cent while the EU continued to rise, up nine per cent in 2017 (see table below).
Japan remains Australia’s second largest direct country investor with total FDI stock levels of A$93 billion in 2017, rising by two per cent and accounting for 11 per cent of total FDI stock in Australia. Canada has also been an important investor in Australia in recent years. After a strong rise of 14 per cent in 2016, inward FDI from Canada surged again by 25 per cent to A$35 billion in 2017.
In recent years, there has been a solid increase in capital inflows from Asia, a trend reflecting Australia's close ties to those economies in the a fast-growing region. China remains Australia’s fifth largest direct investor with a total stock value of A$41 billion. Chinese FDI grew 5.1 per cent in 2017 and experienced an average growth rate of 19 per cent each year since 2011. Other Asian economies are also emerging as fast-growing sources of FDI (in compound annual growth rate measures), with ASEAN rising by seven per cent to A$42 billion, Singapore by five per cent and Hong Kong by 23 per cent to A$26 billion each.
By industry, the mining sector received the highest value of FDI with A$315 billion, accounting for 37 per cent of the total FDI stock value in Australia. This was followed by the manufacturing sector at A$98 billion, real estate at A$91 billion and financial services at A$75 billion. Together, these three sectors accounted for just under a third of total FDI stock value (11.5 per cent, 10.7 per cent and 8.8 per cent respectively). Other industries with strong direct investor activities in 2017 were utilities (up 39 per cent to A$22 billion) and construction (23 per cent to A$25 billion). Human health and social work activities rose sharply over the past two years, up by an average of over 60 per cent a year to A$4.6 billion, albeit from a low base.