Australia’s inward FDI stock surged to almost A$800 billion in 2016

11 May 2017

Tags

  • Edmund Tang
  • FDI

Australia’s inward foreign direct investment (FDI) stock reached A$796 billion in 2016, more than 60 per cent (A$306 billion) higher than 2009[1] levels. This strong performance reflects Australia’s more than 26 years of uninterrupted growth. Australia’s economic resilience, together with its strategic location, increased global trade and investment ties, a proven track record of innovation, and business friendly environment, continues to position Australia as an attractive investment destination within Asia Pacific. In 2017, Australia remains in the top ten worldwide for the seventh consecutive year of AT Kearney’s FDI Confidence Index. This bodes well for existing and new bilateral trade agreements which should continue to support the flow of goods, services and investments between Australia and major Asian trading partners, particularly China, Japan and the ASEAN group.

  • After a seven per cent rise per year, both in 2014 and 2015, Australia’s inward FDI stock value grew by around nine per cent to A$796 billion in 2016. As a percentage of gross domestic product (GDP), Australia’s inward FDI stock was 47 per cent in 2016, up from 39 per cent seven years ago. Traditional sources of FDI continue to perform well: United States and the European Union remain dominant sources of FDI, with total stock values of A$195 billion and A$165 billion respectively. Both were up in 2016 – by about seven per cent each (see table below).
  • Japan remains Australia’s second largest direct investor (individual economy) with total FDI stock levels of A$91 billion in 2016, rising by six 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, especially in the financing and construction of infrastructure, resources and energy, and agribusiness. After strong rises of 34 per cent in 2014 and nine per cent in 2015, inward FDI from Canada surged by 17 per cent to A$29 billion in 2016.
  • 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$42 billion. Chinese FDI grew 16 per cent last year and growing on average each year since 2009 by 25 per cent. Other Asian economies are also emerging as fast-growing sources of FDI (in compound annual growth rate measures), with ASEAN rising by ten per cent to A$44 billion, Hong Kong by 12 per cent to A$12 billion and Malaysia by 14 per cent to A$11 billion.
  • By industry, the mining sector received the highest value of FDI of A$310 billion, accounting for 39 per cent of total FDI stock value in Australia. This was followed by the manufacturing sector at A$91 billion, real estate at A$84 and financial services at A$67 billion. Together, these three sectors accounted for just under a third of total FDI stock value (11.5 per cent, 10.6 per cent and 8.4 per cent, respectively). Industries with strong direct investor activities in 2016 were real estate (up 45 per cent to A$84 billion), professional, scientific and technical services (19 per cent to A$5 billion) and construction (13 per cent to A$20 billion).

Main sources of Foreign Direct Investment stock in Australia, 2009-16

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[1]  The Australian economy performed better than other advanced economies during the Global Financial Crisis in 2008-09.