What global geo-political change means for Australia’s future in business

The FM Resilience Index rates a country’s vulnerability to disruptive events, its ability to recover swiftly and which risks are manageable. In this year’s Index, Australia ranked 13th, a small improvement on 2024, but there is growing cause for concern.

Presented by FM Global

Australia’s competitive GDP per capita (12th globally) highlights our abundant natural resources, strong service sector and ongoing technology and infrastructure investments.

Health expenditure is another area where Australia excels (14th globally). Investment in health is crucial to maintain a healthy workforce and mitigate the impacts of health crises, and a strong private option helps relieve many of the costs.

Education is Australia’s most impressive achievement in this year’s Index, securing top spot. The data reflects robust funding along with a strong post-pandemic rebound with record numbers of international students. Australian universities punch above their weight due to strong global research programs with skilled international faculty members and consistently high student satisfaction.

Food for thought

Despite these strengths, Australia faces significant challenges. It ranked 67th in inflation, indicating a higher annual percentage change in consumer prices than many other nations. Rising interest rates, the high cost of labour and seemingly unstoppable real estate prices (with limited supply) have impacted economic stability and the cost of living, posing a risk to businesses and consumers.

Energy intensity is another critical area (103rd). High energy intensity can indicate inefficiencies and a greater environmental impact, suggesting a need for more sustainable practices. While Australia has made strides in this area, there is still room for improvement.

Australia’s performance in environmental metrics presents a mixed picture. We rank 89th in greenhouse gas emissions and while this isn’t surprising — with energy-intensive mining/manufacturing sectors, a vast petrol/diesel-powered transportation network, substantive methane generation from agriculture and a high standard of living — it needs addressing now.

As the driest inhabited continent with highly variable rainfall, water stress is another area of concern (31st globally) along with climate change exposure and climate risk exposure, two areas where Australia faces significant vulnerabilities (106th and 87th, respectively).

Approximately 70 per cent of our land is used for agriculture, making it highly susceptible to droughts, floods and extreme weather events. The mining sector, concentrated in WA and Queensland, faces risks from cyclones and heavy rainfall. Coastal areas are increasingly threatened by rising sea levels and storm surges. Overall, a substantial portion of Australian economic activities are vulnerable, necessitating robust adaptation and mitigation strategies to safeguard economic stability and environmental health.

Moving forward

Australia’s political landscape contributes positively to its resilience (ranked 12th in political risk). It has a world-class electoral system, with regular 90 per cent-plus voter participation rates. Control of corruption is another strong area (10th globally).

In technology, Australia ranks 25th in internet usage. This connectivity is essential for modern economies. But it’s a source of frustration for many Australians — alongside strong mobile connectivity, they make do with sub-par home broadband speeds, as the National Broadband Network relies heavily on older technologies.

Logistics is a consistent strength (23rd globally). Efficient logistics are crucial for supporting trade and economic growth.

Optimistic outlook

Australia’s urbanisation rate, ranked 25th, reflects the country’s balanced approach to urban development. The National Urban Policy was first introduced in 2011 by current Prime Minister Anthony Albanese. It aims to ensure cities and suburbs meet the needs of current and future generations, promoting social cohesion, economic growth and environmental sustainability.

Fire risk quality is another area where Australia performs well, ranking 18th. This metric evaluates the quality and enforcement of building codes with respect to fire-based design, combined with the level of fire risk improvement achieved. It is essential for protecting lives and property.

It’s no surprise Australia’s 2025 Index performance highlights its economic strengths and those in health, education and governance. But solutions to inflation, energy intensity and environmental risks are a work in progress. With a freshly re-elected government, Australians and the business community will be looking for these to be addressed.

Our transition from traditional industries like mining and manufacturing to a more diversified and sustainable economic future is driven by investment in renewable energy, development of future industries, skills and training programs. These efforts position Australia to be a leader in the global transition to a net zero economy, ensuring long-term economic resilience and sustainability.

Discover more with the FM Resilience Index.