Foreign investors apprehensive about Australia’s economy: NAB

While at home all may seem upbeat, the picture of our economy looks quite different from the outside. According to a report by the National Australia Bank, foreign investors are not too keen on the economic prospects of Australia.

According to chief economist Ivan Colhoun, there is a collective negative view on Australia’s economy which he realised while visiting clients in Britain, Continental Europe and the Middle East.

"I have never experienced such overwhelming negativity on the outlook for the Australian economy and Australian dollar in all my years marketing the Australian economy offshore," he wrote in the report released on Monday. "To be fair, one investor did say that they were not that negative on Australia. Another described the Australian economy as toast."

The downcast in the views of foreign investors have stemmed from global economic factors such as lower commodity prices, global demands and the slowdown of the Chinese economy. Another major factor is Australia’s growing dependence on the housing sector to fill up the gap created by the plummeting investments in mining-related infrastructure. This has resulted in the fall of overseas demand in Australian, shares, bonds and currency.

Experts have also warned that the current foreign interest in Australia’s property market, mainly that of the Chinese investors would also eventually decline.

However, Colhoun pointed out that the falling investments in the mining sectors of Australia will bring other non-mining sectors of the economy to the forefront.

"At the present time, the improvement in the non-mining economy is more than outweighing the drag from mining, particularly in an employment sense," he said.

With regards to China, Colhoun said that the Australian mining sector has taken the brunt of the Chinese industrial production and housing, but the non-mining sector remains largely unaffected.

Colhoun also added that even if foreign investors are apprehensive about investing in Australia, they are not yet making it too apparent due to the country's frequent changes in leadership.

Contact the writer at feedback@ibtimes.com.au, or let us know what you think below.