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Australia is a globally connected economy with strong two-way flows of foreign investment. Foreign capital supports key sectors such as mining, finance, and real estate, while Australian investors are increasingly active overseas through superannuation funds and global business expansion. This article discusses the scale, composition, and recent trends in inbound and outbound investment, including where the investment comes from or goes to, which sectors are involved, and how these patterns have changed over time.
Australia remains a top destination for foreign capital, underpinned by a stable regulatory environment, reliable institutions, and investment opportunities across key growth sectors. The Australian Government actively encourages foreign investment to fill the gap between our high demand for capital and relatively low savings due to a small population. As such, foreign investment has underpinned Australia’s economic development and is essential to financing emerging and existing industries, boosting productivity, and generating employment.
At the end of 2024, the stock of foreign investment in Australia reached A$4.97 trillion, reflecting a long-term average growth rate of 7.7% per year since 2003. Foreign investment now represents 181% of GDP, up from 129% in 2003, indicating an increasingly globalised and capital-intensive economy.
Australia’s strong investment performance contrasts with global trends. In 2022, global FDI fell by 6%, while foreign direct investment into Australia rose by 9%. In 2024, Australia recorded direct investment inflows of $81.0 billion and portfolio investment inflows of $191.6 billion.
This steady growth has also coincided with broader macroeconomic shifts. Historically, Australia has run a current account deficit, offset by a surplus in the capital and financial account. However, since 2019, this trend has reversed, with capital outflows now exceeding inflows, aligning with Australia’s recent shift to a current account surplus.
The composition of foreign investment in Australia has changed significantly over time. Before the 1980s, most investment took the form of foreign direct investment (FDI). But after the financial deregulation reforms of the early 1980s, there was rapid growth in portfolio investment, particularly in bonds, equities, and cash. In recent years, however, direct investment has once again played a leading role in net capital inflows.
As at 31 December 2024, foreign investment in Australia was composed of:
Foreign investment into Australia continues to be dominated by advanced economies. As of 31 December 2024, the largest sources of foreign capital were:
In terms of new transactions in 2024:
China remained Australia’s fifth-largest overall investor in 2023, accounting for 1.9% of the total stock of foreign investment. The ASEAN group collectively represents the fifth-largest source of FDI into Australia, with a combined stock of A$61 billion.
The services sector continues to attract the highest number of foreign investment applications, consistent with broader structural shifts in the Australian economy. In the early 2000s, foreign investment was largely directed toward the financial sector, which accounted for nearly two-thirds of capital inflows before 2007. In the following decade, investment shifted toward the resources sector as global demand for coal, iron ore, and gas surged, prompting expansion of Australia’s mining and energy industries.
Between 2006 and 2023, China’s investment in Australia—totalling AU$70.83 billion (US$46.62 billion)—was also highly concentrated in mining and energy (51%), followed by commercial real estate (20%) and infrastructure (8%). Strategic assets such as ports, utilities, and transport networks attracted significant Chinese interest during this period. In more recent years, sectors such as healthcare, renewable energy, food production, and agribusiness have also attracted strong inflows.
Australia is now actively encouraging investment aligned with its net zero transition. The government is promoting foreign investment in renewable hydrogen, clean energy manufacturing, critical minerals processing, green metals, and low-carbon fuels. In 2022, Australia ranked as the third most attractive destination for FDI in renewable energy, and fifth in 2023. It also ranked third globally for green hydrogen investment and placed in the global top ten for wind, solar, and battery sectors. Over 100 green hydrogen projects are currently in development nationwide.
However, investment in sensitive sectors is subject to greater scrutiny. These include critical infrastructure, technologies, and data systems, as well as acquisitions near government and defence facilities.
Australian investors have significantly expanded their international footprint. Total Australian investment abroad reached $4.32 trillion in 2024, with outbound FDI reaching $976 billion. This is equivalent to 85% of Australia’s inbound FDI stock. Since 2019, Australia has recorded a consistent net outflow of capital, reflecting both growing international opportunities and increasing investment by Australian superannuation and financial institutions in global markets.
In 2024, outbound direct investment reached $21.3 billion, while outbound portfolio investment totalled $146.8 billion, driven by rising allocations to foreign equities.
As of 31 December 2024, Australia’s overseas investment holdings included:
Outbound investment continues to be concentrated in countries with well-developed financial markets and regulatory systems:
In 2024, direct investment outflows were led by the US ($16.7 billion), UK ($9.5 billion), and Singapore ($3.9 billion). Portfolio investments largely flowed to the US ($106.8 billion), Canada ($10.1 billion), and the Cayman Islands ($9.7 billion), consistent with global trends in institutional asset management.
Australian investment in Asia has increased sharply over the past decade, yet remains relatively low. Investment in Asian economies including China, Japan, South Korea, India, and ASEAN countries totalled just $430 million in 2021, up from $129 million in 2011. This still only accounts for 13% of Australia’s outbound investment.
The United States remains Australia’s most significant overall economic partner when both trade and investment are considered. Australia’s deep financial and corporate links with the US and UK reflect long-standing institutional, linguistic, and regulatory alignment.
Australian firms have demonstrated global competitiveness in several industries. Manufacturing, financial services, and mining collectively account for 62% of Australia’s outbound FDI stock. In 2018–19, overseas affiliates of Australian firms generated $42.5 billion in pre-tax profits, returned $15.2 billion to their parent companies in Australia, and reinvested $25.5 billion in new capital.
The mining sector in particular has driven offshore expansion. Since 2002–03, the number of Australian mining affiliates operating overseas has quadrupled. The number of financial and insurance affiliates has also increased significantly. These trends reflect Australia's strengths in engineering, finance, and operational expertise, particularly in large-scale resource development.
Australia’s investment profile is central to its position in the global economy. Inbound investment has helped build Australia’s infrastructure, expand its resources sector, and finance the green transition. Outbound investment, meanwhile, has enabled Australian firms to tap into global markets, diversify their income streams, and scale up their capabilities.
As the economy becomes more capital-intensive and the demands of the energy transition grow, the role of both foreign and domestic investment will only become more critical. Maintaining an open, secure, and strategic investment framework will be key to ensuring Australia continues to benefit from global capital flows—both as a destination and a source.
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