Australia retains 10th spot on Kearney’s global foreign direct investment index

Cited for its economic performance, Australia has held on to tenth spot for the third consecutive year on the latest foreign direct investment confidence index compiled by management consultancy Kearney.

Now into its 27th year – one marked by ongoing economic headwinds and a brewing international trade war – Kearney said its latest foreign direct investment survey report captures a “distinct snapshot of investor sentiment at a moment of global inflection.”

The upshot, gleaned from senior global business executives, is that investors appear to be strategically banking on developed markets in response to the mounting uncertainties, with Australia managing to hold on to its tenth place for the third year running and only three emerging economies occupying spots in the top 20, including Saudi Arabia and the UAE.

Almost one third of those surveyed cited Australia’s economic performance for their faith in the country as a leading global option for investment, while ease of doing business, the talent of Australia’s labour pool, and its quality of infrastructure were also each noted by around a quarter of the respondents as other key reasons to invest in the local market.

More broadly, while optimism for Australia’s economy has dipped from last year’s survey, when it ranked equal second among the top 25 countries in net terms, pessimism toward the local economy is the lowest among the top echelon this year alongside Spain. Optimism for the US economy jumped a massive nine points, but that result comes with a pretty sizeable caveat.

As per usual, the US claimed the overall top spot on the index as the world’s preeminent economy, with 40 percent of those surveyed pointing to economic performance, but it’s certainly worth noting that the survey was conducted in January. Meanwhile, China fell three places into sixth, jumped by the UK, Japan, and Germany, while Canada retained its second place.

Notably, of the top 20 countries on the index, which considers the attraction of markets over the coming three years, Australia ranked the lowest bar New Zealand in terms of tech innovation being cited as an investment driver. On the flip-side, it was a key consideration for the Asia Pacific’s two biggest risers; Japan and South Korea, the latter which climbed six spots into 14th.

Kearney’s A/NZ managing partner Adam Dixon also noted that Australia has yet to rebound from its post-Covid slide after previously ranking 7th, and risked stagnating or slipping even further down the list if the country’s high tax rate and regulatory burdens aren’t sufficiently addressed at a time of new global leadership and rising uncertainty amid growing geopolitical tensions.

Dixon adds, “Recent tariff announcements by the US add to levels of economic uncertainty, although Australian exports are unlikely to face significant discrimination in the US market. Nevertheless, this does suggest an opportunity for businesses making strategic investments to conduct scenario planning to navigate tariff volatility and prepare for emerging risks.”