Australia is a developed country with a population of 22 million. The country is rich in many natural resources and is ranked highly in many global comparisons of factors such as quality of life, healthcare, education, etc. Australia is similar to Canada in that both the countries have a parliamentary democracy and are commodity-based economies. Australia, known as the “The Lucky Country”, offers many advantages as an investment destination.
The following are some of the reasons for foreigners to invest in Australia:
1. Australia is one of the few OECD countries to successfully weather the global financial crisis and it was the first G20 country to tighten the monetary policy by raising the key interest rate last October.
2. The country enjoyed consecutive economic growth for 17 years from 1992 to 2008 and is best positioned to participate in the growth of Asian markets of India and China due to its close proximity and natural resources.
3. The fiscal position is relatively strong and the current account averages just 4.5% of the GDP.
4. Many of Australia’s major export markets are in the vibrant and growing Asia including the countries of China, Japan, India, South Korea making it less dependent on the US and European countries.
5. Australian companies generally have higher dividend yields than most US companies.
6. Some of Australia’s large exports are coal, iron ore, wheat, alumina, etc. Australia is the largest exporter of coal in the world and China is the largest consumer of Australian coal. On the services sector, education has become a major export with Australian universities attracting thousands of students from the emerging markets of Asia.
7. The Australian unemployment rate as of February 2010 is just 5%, compared to the OECD rate of 8.4%.
8. Australia’s equity market has been the best performing market for the past 110 years since 1900, with a real return of 7.5% per year.
9. Australia has the lowest political risk in the region.
10. The regulatory environment is strong but business friendly. A recent IMF study confirmed that Australian banks remained sound during the global credit crisis.