## Australia: Selected Issues

_IMF Staff Country Reports, March 5, 2020_

## Source details

**Canonical URL:** [Australia: Selected Issues](https://www.imf.org/en/publications/cr/issues/2020/03/03/australia-selected-issues-49242)

## Other formats

- [Markdown version](/en/publications/cr/issues/2020/03/03/australia-selected-issues-49242/index.md)
- [Structured JSON version](/en/publications/cr/issues/2020/03/03/australia-selected-issues-49242/index.json)
- [Bundle manifest](/en/publications/cr/issues/2020/03/03/australia-selected-issues-49242/bundle-manifest.json)

## Bibliographic details
- Published: March 5, 2020
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781513536125.002

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### Summary and focus
- Investigates the drivers of business investment in Australia, focusing on the non-mining sectors.
- Identifies aggregate-level drivers for non-mining business investment by looking at long-term trends.
- Delves into firm-level investment behavior and assesses the role of credit availability and uncertainty in different types of firms.
- Long-term empirical and simulation-based analyses suggest that global factors such as rising policy uncertainty and weaker commodity prices have been key drivers of the slowdown.
- In the short term, a renewed escalation in US–China trade tensions could spill over to investment and growth in Australia.
- Domestic factors are also at play, including domestic policy uncertainty and financial constraints, especially for smaller and younger firms.
- The pace of product market reforms can also impact business investment.

### Major findings on drivers of investment
- Global drivers:
  - Rising policy uncertainty (global).
  - Weaker commodity prices.
  - Potential short-term spillovers from renewed escalation in US–China trade tensions to investment and growth in Australia.
- Domestic drivers:
  - Domestic policy uncertainty.
  - Financial constraints disproportionately affecting smaller and younger firms.
  - The pace of product market reforms influences business investment outcomes.

### Firm-level analysis
- Examines heterogeneity in investment behavior across firms.
- Assesses the role of credit availability and uncertainty in different types of firms, highlighting greater vulnerability for small- and medium-sized enterprises and for younger firms.

### Policy recommendations
- Reduce domestic policy uncertainty.
- Ease credit constraints for small- and medium-sized enterprises.
- Incentivize research and development.
- Continue with product market and tax reforms.

### Subjects and keywords
- Subject: Commodity markets, Financial markets, International trade, National accounts, Private investment, Production, Productivity, Terms of trade, Trade policy
- Keywords: Australia, Commodity markets, CR, Global, intangible investment, investment, investment slowdown, ISCR, Non-mining business investment, panel regression, Private investment, product market, product market reform, Productivity, R&D investment, Terms of trade, Trade policy, uncertainty indices, venture capital

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## Content in this bundle

- **Australia: Selected Issues; IMF Country Report No. 20/69; February 6, 2020**
  - [Australia: Selected Issues; IMF Country Report No. 20/69; February 6, 2020 (Markdown version)](/-/media/files/publications/cr/2020/english/1ausea2020002.pdf.md){rel="alternate" type="text/markdown"}
  - [Australia: Selected Issues; IMF Country Report No. 20/69; February 6, 2020 (PDF)](/-/media/files/publications/cr/2020/english/1ausea2020002.pdf){rel="external" type="application/pdf"}

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_Source: https://www.imf.org/en/publications/cr/issues/2020/03/03/australia-selected-issues-49242_