Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 673

Don’t underestimate Australia

My recent conversations with clients have become noticeably more negative on Australia.

It feels similar to the ‘mortgage cliff’ narrative of 2022 and 2023. The risks were spoken about constantly, but the most bearish outcomes did not materialise.

Here are 17 reasons Australia remains an attractive place to invest, and why the economy and markets will prove more resilient than current sentiment suggests.

1. The economy is still expanding. Real GDP increased 2.5% over the year to March 2026.

2. The 4.4% unemployment rate remains well below its long-run average.

3. Mortgage holders are still building savings buffers.

4. Fewer than 1% of variable-rate mortgages are 90+ days in arrears.

5. Household net worth reached approximately A$19.2 trillion in March 2026, increasing by A$225 billion during the quarter.

6. Australian banks remain highly capitalised. Major-bank CET1 ratios remain above 11%, exceeding APRA’s ‘unquestionably strong’ benchmark of 10.5%.

7. High-risk lending is constrained. APRA limits the proportion of new loans that banks can make at debt-to-income ratios of six times or more.

8. Australia has a A$4.4 trillion pool of retirement savings. Superannuation assets increased 7.9% over the year to March 2026, creating a deep and steadily growing source of domestic capital.

9. The Australian dollar acts as a shock absorber. The RBA explicitly identifies this channel as a source of resilience.

10. Australia retains its AAA sovereign rating.

11. Federal net debt remains low relative to most developed economies. Net debt is forecast at 19.9% of GDP in 2026-27.

12. Australian government gross debt to GDP at 51.9% remains below that of every major advanced economy. The average for G7 economies is 123.7%.

13. Australia’s population is still growing at 1.5% a year. Population growth supports aggregate consumption, housing demand, infrastructure investment and the tax base.

14. Economy-wide capital investment represented 25.1% of GDP in the March quarter of 2026.

15. Compulsory superannuation creates recurring investment demand. Contributions and investment returns continually add to the domestic savings pool, supporting Australian equities, credit, infrastructure, property and private markets.

16. Resource export income remains historically high and is becoming more diversified. Iron ore remains the largest export earner, but gold exports are forecast to reach approximately A$73 billion in 2026-27, while LNG volumes remain strong.

17. Australia is positioned across several long-term global investment themes. We have material exposure to iron ore, LNG, gold, copper, lithium, nickel, aluminium and critical minerals required for electrification, renewable energy, defence supply chains and data-centre infrastructure.

Don’t underestimate Australia!

 

Anthony Doyle is Chief Investment Strategist at Pinnacle Investment Management Group.

 

  •   29 July 2026
  • 5
  •      
  •   
5 Comments
Lyn
August 03, 2026

AlanB, your 6 reasons added make 33, let's hope it turns around a national vibe to positivity. Drove through popular Sunday - outing/lunch spot yesterday at 1p.m., as lights red able to view 2 rows of popular restaurants with few or no customers, thinking what a downer for owners on such a beautiful day for outings & all the staff prep. time wasted.

Dan
August 02, 2026

Just about every one of these factors is deteriorating. Markets react to the rate of change.

4
allan
July 30, 2026

I always like the choice of benchmarks We may have less debt than any other country but it us still too much! Put Victoria et al and it is even worse!

2
ACB
August 03, 2026

Great article.
A minor quibble: it’s a shame that the published unemployment numbers exclude underemployment rates. The ABS definition of unemployment excludes someone who has worked for “even for hour during the reference period” which disguises changes in underemployment. So we can’t draw any meaningful conclusions from the raw unemployment numbers without further investigation.

 

Leave a Comment:

RELATED ARTICLES

Shares rebound on hopes of war ending, but stalemate the likely outcome

The bull case for Melbourne

The case for Australian AI

banner

Most viewed in recent weeks

Why have Australian living standards 'fallen' and how do we fix it?

For the last few years there has been much talk of a 'cost-of-living' crisis in Australia and of 'falling living standards'. Lately this has flared up again with the pickup in inflation resulting in a renewed fall in real wages.

Will you run out of money in retirement?

Fear of running out has become a defining retirement anxiety. Why do some retirees die with substantial wealth while others deplete their nest egg? Evidence suggests the answer is more complicated than we think. 

Four options for an income investor’s next dollar

What if Australia’s golden age of dividends is ending? Rather than overhaul your portfolio, it may be worth considering where new capital can work harder. I discuss four income strategies and the trade-offs behind each.

Why spending more in early retirement can improve lifetime income

Conventional wisdom encourages retirees to preserve superannuation. But if those likely to qualify for the Age Pension later in life spend a little more today, it may deliver higher lifetime income and a more stable retirement.

The investment that sidesteps the new tax traps

Tax rules have changed, but many investors are still using yesterday’s strategies. Insurance bonds may offer advantages for those seeking greater control, tax efficiency and certainty about their wealth.

Testamentary trusts have secured the CGT exemption

Treasury’s latest CGT reform draft delivers a win for testamentary trusts and deceased estates, exempting estate-derived gains from the 30% floor. However, questions on death and divorce rollovers remain unresolved.

Latest Updates

Retirement

Why spending more in early retirement can improve lifetime income

Conventional wisdom encourages retirees to preserve superannuation. But if those likely to qualify for the Age Pension later in life spend a little more today, it may deliver higher lifetime income and a more stable retirement.

SMSF strategies

Who really loses from the SMSF borrowing ban?

The ban on borrowing to buy residential property inside a self-managed super fund was framed as closing a loophole for the wealthy. Yet ATO data suggests its effects may be felt more heavily on members with moderate balances.

Investment strategies

The investing rule that explains the next market crash

What if investment success depends less on picking the right assets and more on understanding the decisions of other investors? A principle borrowed from game theory offers a different perspective on markets.

Investment strategies

Gold: should you own the metal or the miners?

Gold is back in the headlines but investors may be asking the wrong question. Before deciding where prices are headed next, it's worth considering whether the investment you choose will deliver the outcome you're actually seeking.

Fixed interest

Global bonds markets are hiccupping

For decades, investors looked the other way as government debt ballooned. But a reckoning may be beginning. Bond markets are stirring and the consequences could reach far beyond markets into everyday life.

Property

Why investors are looking beyond traditional property sectors

A little-known corner of the property market may be quietly benefiting from powerful demographic and healthcare trends. Could this specialised sector offer investors something increasingly difficult to find: enduring demand?

Retirement

Retirement in reality - 6 months in

Is retirement really an identity crisis, or is something else at play? New insights challenge conventional thinking and reveal why some retirees struggle to fully embrace life after work.

Sponsors

Alliances

  • ASA-Logo-RGB-ActiveGreen-web.png

© 2026 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. To the extent any content is general advice, it has been prepared for clients of Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), without reference to your financial objectives, situation or needs. For more information refer to our Financial Services Guide. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.