Net Foreign Factor Income (NFFI) Explained: Australia 2025

Australia’s open, globally connected economy means that money, people, and profits cross our borders every day. Net Foreign Factor Income (NFFI) is the sometimes-overlooked metric that tracks these flows, influencing everything from the nation’s GDP to your own investment returns. In 2025, as global economic conditions shift and Australia’s trade and investment links deepen, understanding NFFI is more important than ever.

What Is Net Foreign Factor Income (NFFI)?

NFFI measures the difference between the income Australians earn from overseas (such as wages, interest, and dividends from foreign investments) and the income that foreign entities earn from Australia. It’s a core component of the national accounts, sitting alongside exports and imports to give a fuller picture of economic activity.

• Positive NFFI: Australians are earning more from overseas than foreigners are earning from Australia.
• Negative NFFI: More income is flowing out to foreign investors and workers than is coming in from abroad.

Historically, Australia has run a negative NFFI because of our high level of foreign investment—think major mining projects, infrastructure, and even the ownership of banks. This has been a persistent feature of our economic structure, but the numbers and their implications are changing in 2025.

How Does NFFI Affect Australia’s GDP and Economy?

Gross Domestic Product (GDP) is a headline figure, but economists often look to Gross National Income (GNI) for a deeper understanding of national prosperity. Here’s why NFFI is crucial:

• GDP counts all income generated within Australia’s borders, regardless of who receives it.
• GNI adjusts GDP by adding NFFI, reflecting the actual income available to Australians.

For example, if foreign companies earn big profits from Australian mines and send them offshore, GDP looks strong, but GNI—and the money available to Australians—is lower. In 2025, with ongoing debates about foreign ownership and rising outbound investment by Australian superannuation funds, NFFI is in the spotlight.

Recent Trends (2024–2025):

• Australia’s NFFI deficit widened in 2024, reaching over $65 billion, according to the ABS. This was driven by higher dividends paid to overseas investors, especially as the mining sector rebounded on the back of global demand for critical minerals.
• Australian super funds have ramped up overseas investments, boosting NFFI inflows but not enough to offset the outflows.
• Policy changes in 2025, including tweaks to foreign investment review thresholds and new tax rules for multinational profit-shifting, are expected to impact future NFFI balances.

Why Should Investors and Policymakers Care?

NFFI isn’t just a number for economists—it affects real-world decisions for government, business, and individuals:

• Budget Planning: Lower NFFI means less national income, which can affect tax revenues and fiscal planning.
• Interest Rates and the Dollar: Persistent NFFI deficits can weigh on the Australian dollar, influencing the RBA’s policy settings.
• Superannuation Returns: As more Aussie super funds invest offshore, NFFI can become a tailwind for retirement savings—if those investments outperform.
• National Debate: With federal elections looming and cost-of-living pressures high, the role of foreign investors in Australia’s economy is under fresh scrutiny. NFFI is a key data point in these discussions.

Case in point: In 2025, the new Critical Minerals Investment Framework is attracting billions in foreign capital, promising jobs and export earnings. But the long-term impact on NFFI—and by extension, on national income—depends on how profits are shared between local workers, companies, and overseas owners.

Looking Ahead: NFFI and Australia’s Economic Future

As Australia navigates the post-pandemic global order, the structure of NFFI will continue to evolve. Watch for:

• Super Fund Expansion: The expansion of Australia’s superannuation funds into global markets could boost inbound NFFI, partially offsetting our traditional outflows.
• Policy Tweaks: New rules around foreign investment and profit repatriation could influence the NFFI balance, especially as the government seeks to keep more economic benefits onshore.
• Tech and Services Exports: Growth in high-value services—education, fintech, digital platforms—may generate more offshore income for Australians, improving the NFFI position.

Understanding NFFI isn’t just for economists—it’s a pulse-check on how global forces shape our national prosperity. As 2025 unfolds, keeping an eye on these income flows will be vital for everyone from policymakers to everyday investors.