Navigating Oceania’s Dynamic Economies: Investing in Australia and New Zealand
Oceania is a region that encompasses Australia, New Zealand, and many island nations in the Pacific Ocean. It is a diverse and dynamic region that offers many opportunities and challenges for investors, both domestic and foreign. In this article, we will focus on the prospects, both current and future, for Oceania, with a particular emphasis on Australia and New Zealand. We will also mention the foreign direct investment (FDI) and business culture for prospective investors in these two countries. Australia and New Zealand are the two largest and most developed economies in Oceania, accounting for about 90% of the region’s GDP.
They are both members of the Organisation for Economic Co-operation and Development (OECD), the Commonwealth of Nations, and the Asia-Pacific Economic Cooperation (APEC). They have strong trade and investment ties with each other, as well as with other major economies in Asia, Europe, and North America. They are also both signatories to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a free trade agreement that covers 11 countries in the Asia-Pacific region.
Australia and New Zealand have both experienced steady economic growth in recent years, despite the challenges posed by the COVID-19 pandemic, natural disasters, and geopolitical tensions. According to the International Monetary Fund (IMF), Australia’s GDP grew by 1.4% in 2021 and was projected to grow by 3.5% in 2022 and 2.9% in 2023. New Zealand’s GDP grew by 2.4% in 2021 and is projected to grow 3.1% in 2024. Both countries have maintained low inflation, unemployment, and public debt levels, as well as stable fiscal and monetary policies.
Australia and New Zealand have also been successful in attracting FDI from various sources and sectors. According to the United Nations Conference on Trade and Development (UNCTAD), Australia’s FDI inflows reached US$36.4 billion in 2021, up from US$30.8 billion in 2020. New Zealand’s FDI inflows reached US$5.2 billion in 2021, up from US$4.2 billion in 2020. The main sources of FDI for both countries were the United States, China, Japan, and the United Kingdom. The main sectors of FDI for both countries were mining, manufacturing, services, and infrastructure.
ABS/RBA 2023
Australia and New Zealand have both implemented reforms and measures to facilitate and regulate FDI in their economies. They have both established agencies to screen and approve FDI proposals based on national interest and security criteria. These are the Overseas Investment Office (OIO) in New Zealand and the Foreign Investment Review Board (FIRB) in Australia. They have both also introduced new legislation and regulations to address the emerging challenges and opportunities of FDI, such as the national security and public order (NSPO) regime in New Zealand and the temporary screening regime in Australia, which were both implemented in response to the pandemic.
Australia and New Zealand have different strengths and opportunities in their respective industries. These industries have benefited from the country’s strong population growth, high disposable income, technological innovation, and natural attractions. They also have the potential to expand their markets and customer base in the Asia-Pacific region and beyond. New Zealand’s best industries for investors in 2024 are likely to be renewable energy, advanced transportation, food and beverage, and technology. These industries have leveraged the country’s competitive advantages in clean and green resources, high-quality agricultural products, and skilled and creative workforce. They also have the opportunity to tap into the growing global demand for sustainable and innovative solutions.
Projected New Zealand Growth Rate, Statista 2024
Besides the industries mentioned above, Australia and New Zealand have other sectors that offer promising prospects for investors in 2024. Australia’s renewable energy industry is expected to grow rapidly, as the country aims to achieve net zero emissions by 2050. The industry is supported by abundant natural resources, such as solar, wind, and hydro power, as well as favourable policies, such as the Renewable Energy Target (RET) and the Clean Energy Finance Corporation (CEFC). New Zealand’s tourism industry is likely to recover strongly, as the country reopens its borders to international visitors after successfully containing the pandemic. The industry is driven by the country’s unique and diverse attractions, such as its natural beauty, cultural heritage, and adventure activities, as well as its reputation for safety, quality, and sustainability.
Australia and New Zealand have both developed a distinctive and attractive business culture that appeals to many investors. They are both ranked among the top 10 countries in the world for ease of doing business, according to the World Bank. They are both known for their innovation, entrepreneurship, and creativity, as well as their openness, diversity, and inclusiveness. They are both also renowned for their high standards of governance, transparency, and rule of law, as well as their respect for human rights, environmental sustainability, and social responsibility.
In conclusion, Oceania is a region that offers many prospects for investors, both current and future. Australia and New Zealand are the two leading economies in the region, with strong and resilient performance, high FDI attractiveness, and positive business culture. They are both well-positioned to capitalize on the opportunities and overcome the challenges of the post-pandemic era, as well as to foster deeper and broader cooperation and integration with each other and with the rest of the world.
References:
Cruise Industry News. (2024, February 12). 2023-24 winter deployment breakdown: Oceania’s global deployment. Cruise Industry News | Cruise News. https://cruiseindustrynews.com/cruise-news/2024/02/2023-24-winter-deployment-breakdown-oceanias-global-deployment/
The Diplomat. (2024, January 9). Australia’s start to 2024 sets the stage for a challenging year. The Diplomat – Asia-Pacific Current Affairs Magazine. https://thediplomat.com/2024/01/australias-start-to-2024-sets-the-stage-for-a-challenging-year/
The Diplomat. (2024, January 20). 2023 was a wild ride for investment in Southeast Asia. The Diplomat – Asia-Pacific Current Affairs Magazine. https://thediplomat.com/2024/01/2023-was-a-wild-ride-for-investment-in-southeast-asia/
Ernst & Young. (2024, February 5). EY releases the overview of China outbound investment of 2023. EY US - Building a better working world. https://www.ey.com/en_cn/news/2024/02/ey-releases-overview-of-china-outbound-investment-of-2023
Invesco. (2023, November). 2024 Investment Outlook – Asia Equities. https://www.invesco.com/content/dam/invesco/apac/en/pdf/insights/2023/november/invesco-2024-investment-outlook-asia-equities-nov-2023.pdf
Journal of International Business Research. (2019). NEW ZEALAND FOREIGN DIRECT INVESTMENTS AND THEIR ECONOMIC AND SOCIETAL IMPACTS: A REVIEW. Allied Business Academies. https://www.abacademies.org/articles/new-zealand-foreign-direct-investments-and-their-economic-and-societal-impacts-a-review.pdf
MyNZTE. (2022, February 16). Business culture in Australia. myNZTE. https://my.nzte.govt.nz/article/business-culture-in-Australia
New Zealand Story. (2022, July 25). Australia’s changing view of New Zealand. Australia’s changing view of New Zealand - Progressive, inclusive and increasingly admired. https://www.nzstory.govt.nz/about-us/news/australias-changing-view-of-new-zealand/
White & Case. (2023, March 20). Foreign direct investment reviews 2023: New Zealand | White & case LLP. White & Case LLP International Law Firm, Global Law Practice. https://www.whitecase.com/insight-our-thinking/foreign-direct-investment-reviews-2023-new-zealand
