Australia: Market Profile
18 January 2018
Major Economic Indicators
- After rising 2.5% in 2016, the Australian economy was estimated to grow by 2.2% in 2017 and forecast to grow 2.9% in 2018.
- While mining industry is a key contributor, the Australian economy has been diversified into and dominated by the services sector which comprises some 60% of its GDP.
- Over the past five years, information, media & telecoms, accommodation & food services, and finance & insurance have been the standout industry performers.
- Australia was the 16th largest export market for Hong Kong. Major export items included telecom equipment & parts, computers and optical goods.
- Australia and Hong Kong launched negotiations for a free trade agreement (FTA) in May 2017.
Current Economic Situation
Australia’s economy is estimated to grow by 2.2% in 2017, a slowdown from 2.5% in 2016, amid weaker mining exports and housing investment due to the bad weather in the first half of the year. For 2018, the Australian economy is expected to grow by 2.9%, according to IMF, backed by a boost of public investment in infrastructure.
While mining industry is a key contributor, the Australian economy has been diversified into and dominated by the services sector which comprises some 60% of its GDP and about 80% of its labour force. Over the past five years, information, media & telecoms, accommodation & food services, and finance & insurance have been the standout industry performers.
Recently, the Australian government has conducted a performance review of Australia’s innovation, science and research system, and is in the process of developing a 2030 strategic plan. The strategic plan will provide a vision of the innovation, science and research system by 2030, set goals, outline the actions required, and advocate reforms on key issues such as innovation investment, innovation, collaboration and skills, delivering and operating research infrastructure, and how to better plan and use Australia’s investment in research and development.
Australia welcomes foreign investment, where the foreign investment policy framework comprises the Foreign Acquisitions and Takeovers Act 1975, its related regulations, and Australia’s Foreign Investment Policy. The Australian government reviews major foreign investment proposals against the national interest on a case-by-case basis through the Foreign Investment Review Board (FIRB). The concept of national interest includes factors such as national security, competition, the impact on other Australian government policies (such as tax and environmental policy), the impact on the economy and the community, and the character of the investor. Where a proposal involves a foreign government or a related entity, the government also considers the commerciality of the investment. Most foreign investment proposals are approved. Once approved, foreign investors are generally treated the same as domestic investors under Australia’s laws.
Australia is a member of the World Trade Organization (WTO). Its tariff schedule is based on the Harmonised System (HS) of coding. Most goods can be freely imported.
Australia has been active in pursuing free trade agreements (FTAs), with respective FTAs in force with New Zealand, Singapore, the US, Thailand, Chile, ASEAN and New Zealand, Malaysia, Korea, Japan, and China. While Australia has recently signed Trans-Pacific Partnership (TPP) and Pacific Agreement on Closer Economic Relations (PACER) Plus, it has a number of FTAs under negotiations: Australia-Gulf Cooperation Council (GCC) FTA, Australia-India Comprehensive Economic Cooperation Agreement, Environmental Goods Agreement, Indonesia-Australia Comprehensive Economic Partnership Agreement, Pacific Alliance Free Trade Agreement, Peru-Australia Free Trade Agreement, Regional Comprehensive Economic Partnership (RCEP), Trade in Services Agreement (TiSA) and Australia-Hong Kong Free Trade Agreement.
Hong Kong's Trade with Australia
In the first 11 months of 2017, Australia was the 16th largest export market for Hong Kong. Hong Kong's total exports to Australia amounted to US$4,190 million in the first 11 months in 2017, up 2.6% year-on-year. Major export items included telecom equipment & parts (accounted for 31.7% of the total), computers (8.7%), optical goods (4.7%), other articles of apparel, of textile fabrics (4.1%) and toys, games & sporting goods (3.4%).
Hong Kong's imports from Australia rose by 3.9% year-on-year to US$2,117 million in January-November 2017. Major import items included fruit and nuts (excluding oil nuts), fresh or dried (accounted for 11.8% of the total), telecom equipment & parts (10.5%), edible products and preparations (6.5%), other meat & edible meat offal, fresh chilled or frozen (6.2%) and milk and cream and milk products other than butter or cheese (5.5%).
Australia's Economic Involvement in Hong Kong
Australia has considerable investment in Hong Kong. According to the Hong Kong Census and Statistics Department, there were 35 regional headquarters (RHQs), 48 regional offices and 91 local offices of Australian companies in Hong Kong as of 2017. All "big four" Australian banks, namely Australia & New Zealand Banking Group Ltd. (ANZ), Commonwealth Bank of Australia, National Australia Bank, and Westpac Banking Corporation, have a presence in Hong Kong. Other major Australian companies in Hong Kong include Leighton Asia (construction), Telstra International Group (telecom) and AME Group (mining).