Australia regains top 10 spot in Kearney’s FDI Confidence Index

16 April 2023 Consultancy.com.au 3 min. read
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A thawing in tensions with China and strong commodities market has seen Australia rebound in the latest FDI study compiled by management consultancy Kearney, having last year fallen four spots.

Australia has regained its place among the top ten most attractive destinations for foreign direct investment according to the latest FDI Confidence Index compiled by global management consulting firm Kearney.

The one spot rise from the previous survey is largely attributed to a thawing of political tensions with China – the country’s largest trading partner – together with strong commodity exports. China’s own move up the table was also cited as a factor.

World rankings

“Australia’s ranking reflects international confidence buoyed by strong governance, positive signs for our commodity markets and improved international relations with key investment markets,” said Kearney A/NZ managing partner Adam Dixon. “Ultimately, foreign investment helps stimulate economic growth, creates jobs, supports local businesses, and builds a framework of an efficient infrastructure, enhanced innovation and high productivity.”

A product of Kearney think-tank the Global Business Policy Council, the annual study – which is now into its 25th edition – identifies the top 25 nations worldwide for future investment flows based on present investor confidence, with transparency of government regulations, technological and innovation capabilities, and tax rates and ease of payments currently top of mind.

Notably, 19 out of the top 25 preferred countries are developed markets. The US topped the table for the 11th year running, followed by Canada, Japan, Germany, the United Kingdom and France.

FDI inflows

China in at 7th was one of the biggest movers, rising three spots from 10th on the back of renewed economic activity following the country’s decision to drop its zero-Covid approach toward the end of last year. The biggest jump however was Singapore, which rocketed into 9th place ahead of Australia from a previous ranking of 18th.

The Asia Pacific was seen as an attractive investment market in general, despite simmering regional tensions, with the addition of India and Thailand pushing the region’s number of entries up to eight.

Emerging markets

Kearney also for the first time this year compiled a list of the 25 most attractive emerging markets, with a quartet of Southeast Asian nations – Malaysia, Indonesia, the Philippines and Vietnam – crowded together in 10th to 13th place on the rankings.

Emerging market rankings

“Despite a volatile global economy, we are encouraged by Asia Pacific’s positive performance on the Index and the optimism investors have in the region,” said Kearney APAC head Arjun Sethi. “Such optimism may mirror the region’s strong post-pandemic recovery, relatively high near-term growth prospects, and robust dynamism. These indicate the economic resilience and strength possessed by the region, as businesses adapt to evolving global challenges.”

All up, more than 80 percent of surveyed executives – all representing companies with revenues in excess of $500 million – stated a planned increase in FDI over the next three years, with an even greater percentage believing FDI would drive profitability and competitiveness. While almost two thirds also expressed optimism for the global economy, concerns remained as to commodity price increases, geopolitical tensions, and political instability in emerging markets.