Australia’s ‘Big Five’: the dynamic industries that power trade & investment

11 Sep 2020


  • Edmund Tang

This blog examines five, world-leading Australian industries: our energy and resources sector; agriculture and premium food; international tourism; international education; and lastly our financial markets.

The fortunes of these five sectors are in constant flux. While international tourism and education take a major COVD-related hit in 2020, our food, and energy and resources sectors are buoyant. And Australia’s finance sector is critically important. Today, Australia is home to large, expanding and sophisticated financial markets, including one of the world’s largest pool of managed fund assets.[1]

1. A leader in energy and resources

Proximity to resources-hungry Asian markets underpins Australia’s position as a major global exporter of resources and energy. From FY2001–02 to FY2018–19, Australia’s total resources and energy exports have quintupled to around A$280 billion (see BMR chart below). During 2019, Australia vied with Qatar as the world’s largest exporter of Liquefied Natural Gas (LNG), helping to push Australia’s balance of trade into surplus in early 2020.

New resources also beckon. In the coming decade we anticipate a new wave of investment in Australia’s lithium and critical minerals industries. Australia’s lithium industry will benefit from the rapid rise in demand for lithium-ion batteries that power electric vehicles. Meanwhile, US demand will spur rare-earths mining and processing.

Australia’s long-term strength in resources looks rock solid. The country has the world’s largest reserves of iron ore, gold, lead and zinc, as well as the second largest reserves of bauxite, nickel, lithium and cobalt. With the world’s largest uranium reserves, the second largest deposits of brown coal and huge LNG exports, Australia is now a major energy supplier to Asian economies.

The current global downturn is affecting commodities in a variety of ways. Nevertheless, the overall outlook for the energy-export sector remains relatively strong, according to the latest study of Department of Industry. Export earnings of Australia’s resources and energy are estimated to set an all-time record of over A$290 billion in FY2019–20.[2]

Australia’s resources and energy sector, 2001–02 to 2018–19

Nominal value of exports, 2001–02 to 2018–19

Australia’s resources and energy sector, 2001–02 to 2018–19; Nominal value of exports, 2001–02 to 2018–19

Source: Austrade Benchmark Report (BMR) 2020, page 18; Austrade

2. Clean, green agriculture

Australia is a major global producer of beef, wheat, wool, wine, barley, lamb, raw cotton, sugar, canola, live feeder/slaughter cattle and chickpeas. And this makes Australia a major agri-exporter. In 2019, the value of Australian food and fibre exports rose to almost A$50 billion.

Of Australia’s 15 top food markets, 12 are in the Asia region[3], and they account for approximately three quarters of the nation’s agrifoods exports (see BMR chart below). With a reputation for high agricultural standards and a well-regulated food industry, Australian produce commands premium prices in Asia.

Meanwhile, Australia’s network of regional free trade agreements gives Australian growers preferential access to markets across Asia, and in the United States.

Notes: 1. Includes all unprocessed food and live animals; raw hides, skins and furskins; and all unprocessed textile fibres. 2. Export value of Australian food and fibre is defined as the total export value of primary products (unprocessed – food & live animals total); primary products (unprocessed – Other – Hides skins & furskins raw); primary products (unprocessed – Other – Textile fibres unprocessed & waste); and primary products (processed – food total). 3. The Asian region is defined as Asia, ASEAN and Oceania.

Australia’s top 15 export destinations for food and fibre

A$ billion, 2019

Australia’s top 15 export destinations for food and fibre; A$ billion, 2019

Source: Austrade Benchmark Report (BMR) 2020, page 21; Austrade

3. A global education hub

Before the COVID pandemic closed borders, Australia had become the third most popular destination in the world for foreign students enrolled in higher education. In 2019, Australia attracted over 750,000 international students who enrolled in universities, technical colleges, vocational education and training colleges, English language courses, and regular schools (see BMR chart below).

Around 80 per cent of the students who study in Australia arrived from the Asia region. The quality of Australia universities is a major draw. In global rankings, seven Australian universities make it into the top one hundred, and more than half of our higher education institutions are now ranked in the top 400. This puts Australia in an ideal position to continue growing as a global education hub, once travel restrictions are lifted.

Notes: 1. Enrolment numbers reflect international student enrolments (by country of citizenship). 2. 2019 data contains statistics relating to enrolments in higher education courses in each Australian Higher Education Provider and is correct as of the April 2020 release of student data (revised monthly). 3. Excludes enrolments from New Zealand as students do not require an international student visa to study in Australia. 4. ‘Other’ includes enrolments from countries not known or where no further information was provided.

International higher education enrolments by regional grouping

Onshore students on student visas only, full-year 2019

International higher education enrolments by regional grouping; Onshore students on student visas only, full-year 2019

Source: Austrade Benchmark Report (BMR) 2020, page 25; Austrade

4. A major tourism industry

Australia’s tourism industry has also taken a huge knock from the closure of international borders. Until borders re-open, however, Australian tourism can draw on domestic strength. In 2019, international traveller spending contributed $31 billion to the Australian economy, but this is dwarfed by the $107 billion that Australians themselves spent on domestic overnight travel and daytrips. [4]

With no overseas options, Australia’s high spending domestic tourists will help sustain Australian tourism until global visitors return.

When borders do re-open, the Australian tourism industry will build on strong foundations. Tourist arrivals – which involve stays of less than one year – increased by a compound annual growth rate of 6.4 per cent a year between 2014 and 2019. In the year ending December 2019, Australia attracted 9.5 million short-term international visitors, according to data published by the Australian Bureau of Statistics (ABS).

The Asia-Pacific region is Australia’s largest source of in-bound tourism. Countries in the region accounted for 11 of our top 15 tourism markets, and 5.8 million sightseers in 2019. The number of arrivals from these 11 markets has risen by 7.2 per cent per year over the past five years and now accounts for over 61 per cent of total overseas tourist arrivals in Australia.

Australia’s popularity makes us the world’s eighth largest international tourism market. In 2019, Australia attracted 3.1 per cent share of global tourism receipts, currently worth US$1.3 trillion (see BMR chart below).

Notes: 1. There are methodological differences between UNWTO and Tourism Research Australia (TRA) related to education travel expenses.

Top 15 global tourism receipts – markets

2019, receipts (US$)

Top 15 global tourism receipts – markets; 2019, receipts (US$)

Source: Austrade Benchmark Report 2020, page 25; Austrade

5. Strong financial markets

Financial services is another sector where Australia has exceptional strength. Currently, Australia has the world’s eighth largest managed fund assets pool[5], eighth largest over-the-counter (OTC) foreign-exchange daily turnover, ninth largest stock market and tenth largest debt securities market (see chart below). The managed funds sector is underpinned by a mandated retirement savings scheme (superannuation system) that has resulted in the fourth largest pension pool in the world.[6]

As of December 2019, the total assets of Australia’s financial markets were estimated to be worth about US$6.6 trillion (A$9.5 trillion) – almost five times the country’s nominal GDP.

The sector has grown on average by 9.2 per cent per year over the past two decades. This is well above the average nominal GDP growth rate of 5.9 per cent.[7] The strength of the financial services industry means it is Australia’s largest service contributor to gross value added and a significant source of capital (see chart below).

Australia’s real gross value added (GVA) by industry

Total ending December 2019, as a percentage of total industry

Australia’s real gross value added (GVA) by industry; Total ending December 2019, as a percentage of total industry

[1] Investment Company Institute (ICI), Worldwide Mutual Fund Assets and Flows, June quarter 2020 Update (22 June 2020).

[2] Department of Industry, Innovation and Science, Office of Chief Economist, Resources and Energy Quarterly, June 2020.

[3] The Asian region is defined as Asia, ASEAN and Oceania.

[4] Tourism Research Australia: Moving Forward – The Role of Domestic Travel in Australia’s Tourism Industry, August 2020.

[5] ICI, Worldwide Mutual Fund Assets and Flows, March Quarter 2020 Update (22 June 2020). Australia’s managed fund (MF) assets was globally ranked sixth in the December quarter 2019, which was revised downwardly from the fifth position from the ICI December 2019 issue. Australia’s MF assets fell to the eighth place globally in March quarter 2020, largely due to weakening Australian dollar in the first three months 2020 (around 12 per cent drop in Australia dollar against US$).

[6] Willis Towers Watson, Global Pension Assets Study 2020 (released 10 February 2020).

[7] Reserve Bank of Australia Statistics, B1 Assets of Financial Institutions (1 June 2020); Australian Bureau of Statistics, Cat. No. 5655.0 Managed Funds, Australia, March 2020, Table 1 (released 4 June 2020).