Blessed with rich natural resources, Australia’s economic activity has been augmented by demand for commodity exports and the investments made in the mining sector over the past decade. The risk however, is that Australia has become increasingly reliant on high commodities and robust demand from China to sustain strong levels of growth. The country’s free-market economy is supported by a highly educated workforce. Australia is a mature democracy with a broadly stable party system.

Our coverage – using our unique Total Analysis model – ensures that our clients make sound investment decisions in Australia. Our teams keep our clients informed of the latest market moves and political developments as part of our 'top-down' and 'bottom-up' perspective. We also provide in-depth analysis on 23 of Australia’s most important industries. Combining interactive data and forecasting with our risk-assessed and results-proven analysis gives our clients the big picture they need. We are confident that you, as our client, will find doing business in Australia is made easy.

Country Risk

Australia Country Risk

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Core Views

  • Real GDP growth is highly likely to slow over the coming years owing to a number of factors: slowing growth in the working age population; an increasing share of government spending relative to GDP; and a reversal in the country's terms of trade; and the growing risk of deflation. These impediments will result in real GDP growth averaging 2.3% over the next decade, down from 2.9% over the past decade.

  • Prime Minister Tony Abbott's leadership is looking increasingly precarious following the defeat of the Liberal National Party in the Queensland state elections. With approval ratings hitting new lows, the prospects of a turnaround look slim at present, and the Labor Party is in prime position ahead of next year's general election.

  • We remain bearish on the Australian dollar despite the large fall we have...

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Australia Industry Coverage (24)


Australia Agribusiness

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BMI View: The Australian agriculture sector is still recovering from a decade of subdued production growth due to extreme weather and a lack of investment. The industry is expected to remain buoyant in 2014 and 2015, largely supported by export demand from Asia and elevated grains and oilseeds prices. In the longer term, we see major export growth opportunities in the sugar and livestock sectors. Australia will face stiff competition from Asian countries such as Thailand for sugar and from the US and Brazil for meat, but it will remain a key player in those industries. Apart from growing competition, Australia will have to face high production costs and a vulnerability to extreme weather...

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Australia Autos

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In March 2015, the Abbott government performed a major policy U-turn, by reversing its previous plan to cut AUD900mn in subsidies to carmakers and auto component manufacturers, according to a report by Bloomberg. This followed the decision by the Senate to block these cuts, which had originally been unviled in the 2014 budget. This means that the government will maintain full funding to the auto industry through the Automotive Transformation Scheme (ATS) until the end of local production in 2017.

The ATS was introduced by the former Labor government in 2011 to provide assistance of nearly AUD1.9bn (USD1.5bn) to automakers, service providers and component and machine tool producers. After being elected in 2013, Abbott's government had pledged to cut subsidies to carmakers as part of its bid to halt 'corporate welfare' to ailing companies. Carmakers Toyota Motor, Ford Motor and ...

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Commercial Banking

Australia Commercial Banking

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Commercial Banking Sector Indicators
Date Total assets Client loans Bond portfolio Other Liabilities and capital Capital Client deposits

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Consumer Electronics

Australia Consumer Electronics

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BMI View: High incomes and strong demand for premium devices make Australia a lucrative market for consumer electronics vendors. However, the outlook for the Australian consumer electronics market is weakened by the maturity of the market, with high penetration rates for PCs, HD TV sets and smartphones leaving diminished prospect for rapid growth compared to the majority of APAC markets. Furthermore, the economic outlook is weakening, with currency depreciation a medium term downside risk that could affect confidence levels and the affordability of imported device. Despite these limitations on growth vendors can look to emerging...

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Defence & Security

Australia Defence & Security

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BMI View: We expect Australia's defence budget to continue increasing in absolute terms in the next five years. This will be driven by Australia's defence policy focused on becoming a key player in regional and international security, which will require an upgrading of both its navy and air force capacities. The government is looking to take advantage of the globalisation of the defence market to continue importing defence materiel whilst, simultaneously, facilitating Australian defence SMEs' access to the market. This will open up development opportunities for both international and national companies operating in the defence sector.

In its 2009 Defence White Paper, Australia spelled out its Force 2030 strategic defence objective. It...

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Food & Drink

Australia Food & Drink

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BMI View: We hold a below-consensus view on the short-term outlook for Australia's economy, but see opportunities in the food and drink sector. For example, the country's mass grocery retail sector faces some short-term challenges, but we believe it remains a reasonably attractive proposition for industry players. Discount formats in particular demonstrate strong opportunities for growth. We see premiumisation as the main driver of growth in non-carbonated soft-drinks. Meanwhile our low growth forecasts for private consumption have led us to downgrade our expectations for overall food consumption. Per capita consumption will grow even more slowly than the total, reflecting demographic concerns.

We maintain our forecast for real GDP growth in Australia to come in at 2.3% in 2015, versus consensus expectations of 2.5% as the ongoing...

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Freight Transport

Australia Freight Transport

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BMI View: In 2015, the three freight modes in Australia are set to perform similarly with the annual outperformer in terms of growth expected to be rail freight (2.86%). Road will continue to significantly outperform the other modes in terms of total tonnage handled. Trade growth will remain relatively stunted in 2015 due to a combination of falling export revenues from key iron and coal markets and dwindling import demand owing to subdued labour market factors.

Australia's top export partner continues to be China by a large margin. China's export sector continued its surge in February 2015, with growth accelerating to a blistering...

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Information Technology

Australia Information Technology

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BMI View: Due to high labour costs, BMI believes Australian enterprises could be among the early adopters for AI applications such as IBM's Ask Watson service, which has already been trialled by ANZ Bank. Emerging technologies aside, the growth outlook is relatively weak in Australia. This is in part a consequence of market maturity, meaning growth will underperform the APAC average, which is weighted to emerging markets, but there is also macroeconomic downside as BMI expects economic growth to slow over the medium term.

Headline Expenditure Projections

  • Computer Hardware Sales: AUD8.2bn in 2014 to AUD8....

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Australia Infrastructure

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BMI View: Australia's construction sector will slow in 2015, with growth being weighed down by a slowdown in the mining sector, a lack of competitiveness and political headwinds. Growth however, remains respectable, supported by the housing sector - fuelled by record-low interest rates - and the government's emphasis on developing the country's infrastructure.

Key Trends And Developments

  • We remain positive over growth for the sector in 2015, although our 2.9% growth forecast for the construction sector is still lower than the 10-year historical...

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Australia Insurance

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BMI View: Australia's insurance sector is one of the best developed and most profitable in the world. However, the market faces a number of challenges, including a weakening local currency, economic headwinds and the strength of the country's superannuation system. That said, we believe most areas of the market will experience solid premiums growth over the next few years.

In Australia, both the non-life and the life segments are dominated by organisations that have the advantages of well-established brand names, ability to develop innovative products, proven ability to execute acquisitions, broad product portfolios, multi-channel distribution, financial strength, scale, access to capital and - in many cases - the advantage of being part of a broader financial...

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Medical Devices

Australia Medical Devices

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BMI Industry View : The Australian market has performed well in recent years, driven by a strongly-growing economy and the requirements of an increasingly elderly population. However, a weakening of the Australian dollar over the next five years is expected to bring the momentum in the market to a halt.

Headline Industry Forecasts

  • At USD4,903.9mn, the market ranks amongst the top 20 largest in the world, while per capita spending is on a par with European markets such as the Netherlands or Finland. Growth for the 2013-2018 period is expected to be subdued; estimated at a CAGR of 1.2% in USD terms which will raise the market to USD5,206.9mn by 2018.

  • Since 2001, medical device imports have seen a period of sustained growth. In 2013,...

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Australia Metals

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BMI View:   Australia will see subdued growth in both production and consumption of most metals as a weakening global commodity market continues to take its toll on the economy. While significant additional global monetary stimulus should help to boost metal prices in the near term, the bout of loosening measures will be insufficient to stem the slowdown and the medium-term outlook for metals remains weak.

We expect a slowdown in the metals industry in Australia on the back of slowing demand in China. Weak demand from slowing domestic construction and a cooling export market...

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Australia Mining

Oil & Gas

Australia Oil & Gas


Australia Petrochemicals

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While Australia's hydrocarbons resource base is strong, BMI's latest Australia Petrochemicals Report does not envisage it will lead to investment in new petrochemicals capacity over the medium-term due to infrastructural and cost barriers.

The country's refining outlook is poor due to declining oil production in fields that had supplied the country's refining sector located in the east. The relatively unsophisticated refining sector is increasingly uncompetitive and by 2016 refining capacity will be half the peak seen in 2003 due to plant closures. On the upside, it appears that most of the refineries remaining in Australia intend to stay in operation. Reduced refinery output will limit naphtha availability for local petrochemicals production, although naphtha is not the main source of feedstock.

Gas availability is set to increase dramatically, although much of this will be exported. Opportunities for using ethane in...

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Pharmaceuticals & Healthcare

Australia Pharmaceuticals & Healthcare

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BMI View: The domestic backlash against the Australian government's budget saving efforts focusing on areas of the healthcare sector, including general practice copayments, will translate into additional incentives for the government to place pressure on pharmaceutical expenditure. Patented drugs will continue to account for the majority of the pharmaceuticals market share in Australia, with this share to only slightly moderate over the next years. In fact, cost containment efforts will continue to present headwinds to multinational pharmaceutical companies seeking to list their products on the Australian Pharmaceutical Benefits Scheme and achieve premium price levels. However, despite the...

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Australia Power

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BMI View: Australia's power sector is facing unprecedented changes and challenges. Although demand for electricity remains strong, consumers are increasingly satisfying their need in the form off-grid solar energy rather than on-grid electricity from traditional sources of energy such as coal and gas, severely affecting the profitability of traditional providers and forcing the closure or mothballing of coal and gas-fired power stations. While coal and thermal generation will remain buoyant over the next decade, helped by changes in government policy, plentiful supplies of coal and shale, and the development of LNG stations, the most significant market opportunities will lie in renewables.

Australia's power sector...

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Real Estate

Australia Real Estate

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BMI View:  Australia's commercial real estate market is buoyed by strong fundamentals, with a mature economy, highly skilled workforce, transparent regulation and a welcoming business environment. However, the economy has been posting slower growth; and a slowdown in demand in China, a major destination for Australia's mineral exports, could have an indirect effect on Australia's economy. Overall demand for commercial real estate is expected to remain low because of this, and we are forecasting no increase in rental rates in 2015 and 2016.

The economic outlook is set to remain blighted by the impact of the Chinese slowdown and government austerity, as well as a lack of consumer confidence. We see real GDP growth coming in at 2.4% in 2014 and 2.3% in 2015, well below the 3.8% achieved in 2012. Although there will be a slight...

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Australia Renewables

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BMI View: The continued political deadlock over the RET in Australia is jeopardising the growth of the domestic renewables industry significantly. Until the RET can be agreed, the future of the sector remains largely in the balance, with investment decisions likely to be stalled or abandoned entirely.

Since assuming office in September 2013, Prime Minister Tony Abbott and the Liberal-National coalition have taken several divisive steps to scale-back or repeal emissions reduction and green energy policies. In July 2014, the Abbott administration abolished the carbon tax scheme, which was one of the mechanisms supporting the growth of renewable energy. Following that, the government announced that it was set to review and amend the country's renewable energy target (RET), which is the main policy tool encouraging investment into the renewable energy sector. The government aims to cut the...

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Australia Retail

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BMI View: Australia's retail market is very well developed, benefiting from a large proportion of mid to high range income households with disposable income for spending on non-essential items. The strengthening of the US dollar means that in 2015 we expect to see a contraction in the retail market in US dollar terms, though we note that in local currency terms retail spending continues to increase and by the end of the forecast period we will see an overall increase in household spending in both USD and AUD terms.

Australia does face some significant economic headwinds in 2015. The resource boom is winding down and investment in the key mining sector is subdued. As such we expect GDP growth to slow to 2.3% in 2015, down from 2.8% in 2014. Businesses will likely be faced with higher import costs as the Australian...

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Australia Shipping

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We have barely altered last quarter's forecast for Australia's shipping industry, with just minor alterations to the Port of Sydney's tonnage throughput projections. In terms of the wider economy, BMI forecasts Australia's real GDP growth to average 2.3% per annum over the next decade, down from 2.9% over the past decade, as the combined headwinds of slowing population growth, greater government spending, declining terms of trade and heightened deflations risks weigh on economic activity. With this in mind, Australia's shipping industry will not see huge strides in terms of year-on-year (y-o-y) growth, but it will nonetheless enjoy modest gains over the medium term.

The port of Fremantle leading the way in terms of both y-o-y tonnage growth (3.40%) and box throughput growth (3.70%) in Australia in 2015. Meanwhile, the port of Melbourne will see muted growth after two years of...

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Australia Telecommunications


Australia Tourism


Australia Water

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BMI View: This quarter we have updated and expanded our forecasts across various areas of the water sector. We now cover mains and non mains consumption and extraction, water losses, desalination production and household connections to mains networks. Our new forecasts reflect our overall expectation that water demand in Australia will continue to rise, putting additional pressures on the dwindling freshwater reserves, and stimulating investment in desalination and water treatment and reuse infrastructure.

Heavily dependent on surface water, Australia's water market is increasingly looking to recycled water sources as droughts intensify and ground water resources dwindle. While new reservoirs are being constructed, and large wastewater reuse projects are underway, rising demand for water from mains and non mains users puts increasing pressures on limited resources. Despite the...

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