Japan and Australia
Economic Security through Stronger Ties
Japan and Australia have formed a strong economic and strategic partnership over many decades. In 2026, both countries celebrate the 50th anniversary of the Basic Treaty of Friendship and Co-operation, an agreement that has served as the foundation of the strong bilateral relationship. While the milestone calls for celebration, it also presents Japan and Australia with an opportunity to forge a deeper friendship, especially as globalisation faces significant challenges.
Historically, Japan and Australia have enjoyed a rich history of trade and investment. Japan has been a top two destination for Australia’s exports since the 1960s. Japan has also been a major source of investment for Australia. In 2024, Japan’s total stock of investment in the Australian economy stood at $282.9 billion, up almost $100 billion since 2014. At $159.5 billion, direct investment, often viewed as a long-term commitment, accounts for more than half of Japan’s total investment in Australia. On the other hand, Australia’s total investment in Japan remains relatively low and is dominated by portfolio flows. However, this has grown significantly since the Japan-Australia Economic Partnership Agreement (JAEPA) came into effect in 2015. Australian companies are also playing a key role in some sectors of the Japanese economy such as real estate and infrastructure development.
Despite international challenges, the macroeconomic outlook for both Japan and Australia is optimistic. Robust trade and investment ties provide a solid foundation for future collaboration. However, navigating global economic conditions, including rising protectionism and trade disputes, will require strategic manoeuvring. Australia’s steady economic growth, supported by well-developed trade linkages and investment in the energy transition, and Japan’s commitment to corporate governance reforms, position both countries well for future opportunities.
Act Now to Build Economic Resilience
Globally, 2025 has seen the threat or imposition of significant tariff barriers, marking both a deterioration and a re-ordering of global trade. While these developments have captured significant attention, they are also part of what has already been a stalling of global connection over recent years. Given this challenging environment, strategic economic collaboration between like-minded countries such as Japan and Australia is becoming more important, both for economic security and to manage risks effectively. Trust and reliability have become paramount, emphasising the need to widen and strengthen existing ties.
Responding to these challenges and reflecting on the importance of the Australia–Japan relationship, Deloitte is proud to present a thought leadership on strengthening Australia–Japan economic resilience. This publication is a collaboration between Deloitte Australia’s Japanese Services Group and Deloitte Access Economics, bringing together insights from leading economists and business practitioners across both countries.
The strength of Japan and Australia’s relationship should be celebrated, but it cannot rest on past achievements. Instead, the relationship must continue to evolve to provide an effective hedge against growing geopolitical risks while leveraging emerging economic opportunities. Incorporating technologies like Artificial Intelligence (AI) and Quantum Computing wherever possible will be key.
There are five priority areas where increased collaboration between Japan and Australia could be particularly beneficial:
This report highlights opportunities for Japanese and Australian stakeholders to collaborate in ways that drive meaningful impact. We hope it inspires engagement and helps build partnerships that reinforce long-term relationships between the two countries. Please feel free to contact the authors directly for any questions or further discussion.
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