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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
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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.

 

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