Core arguments and facts of the 2018 Benchmark Report: Global Ties

08 Mar 2018

Tags

  • Edmund Tang
  • Benchmark Report
  • Australian Economy

Following my previous post, where I discussed the topic of Innovation and Skills, I would like to look in more detail at another key strength of Australia highlighted in the Benchmark Report – Global Ties.

Australia is a globally integrated economy and the country is deeply connected through geographic proximity, trade, investment, tourism and cultural links with the dynamic Asian region. Australia’s experience and free trade agreements facilitate the smooth flow of goods, services and investments with major economies across Asia, Europe and North America.

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 Asia Pacific.

Another Australian strength is our time zone advantage which bridges the world’s major time zones, offering 24-hour access for organisations with round-the-clock operations.

Australia’s strong global ties reflect :

  • Successful Trading Economy . Australia’s export volumes rose by 5.4 per cent in 2016-17, with volumes of minerals & fuels up over five per cent, rural goods up 12 per cent and services up about eight per cent, according to the latest report, Composition of Trade, Australia , released by the Department of Foreign Affairs and Trade. In value terms, Australia’s total export of goods and services grew by 17 per cent in 2016-17, with robust growth in minerals and fuels (33 per cent) and rural goods (8 per cent). Services exports increased by over eight per cent in 2016-17 and contributed A$82 billion to export earnings, thanks to strong growth in education and tourism services ( see table below)

trade-by-broad-sector

  • Strong Asian Connection. Australia’s two-way trade in goods and services in 2016-17 totalled A$735 billion, making up 42 per cent of nominal GDP. Twelve of Australia’s 15 largest trading partners – with a total trade value of A$463 billion and a total market share of 63 per cent – are located in Asia, reflecting the nation’s competitive, strategic location and growing economic ties with the dynamic, fast-growing region (see table below).

exports-and-imports

  • High-Growth Destination for Foreign Investment. Australia presently hosts around A$3.3 trillion of foreign investment stock. Both foreign direct investment and other investment (including portfolio investment) have recorded strong growth, up 8.6 per cent and 9.7 per cent on average each year respectively since 1997. As a percentage of GDP, Australia’s total value of foreign investment stock reached 185 per cent in June 2017, double that of two decades ago ( see table below).

total-foreign-investment

  • Top Destination for FDI. Australia is one of the world’s top destinations for foreign direct investment (FDI), receiving a 2.2 per cent share of the global stock of FDI in 2016. According to UNCTAD’s World Investment Report, Australia was the world’s eighth most popular destination for global FDI flows in 2016 (up from 16th in 2015) ( see table below).

FDI

  • Asia a Growing Source of FDI. After a seven per cent rise per year in 2014 and 2015, Australia’s inward FDI stock value grew by around nine per cent to A$796 billion in 2016. Traditional sources of FDI continued to perform well: the USA, Japan and the European Union remain dominant sources of FDI. In recent years, there has also been a solid increase in capital inflows from Asia, particularly China and the ASEAN region, reflecting Australia’s close ties to these fast growing nations (see table below).

main-sources-fdi