Slow economic growth and a drop in business efficiency have seen Australia drop five places in the global international competitiveness ranking.
The country dropped from its best ranking since 2011 of 13th to 18th in the IMD Competitiveness Yearbook 2025, which ranks 69 countries' competitiveness.
“This result shows [that] Australian businesses and policymakers should focus on measures to strengthen the economy, in particular reviving our flagging productivity,” CEDA Chief Economist Cassandra Winzar said.
Business performance also dropped from 7th to 16th, and business efficiency dropped from 22nd to 37th.
Australia has also dropped from the 20th to the 60th in real GDP growth. This reflects the nation's soft economic growth and high population growth in comparison to others in 2024.
According to the Australian Bureau of Statistics, GDP rose 1.3% in 2024, compared with a 3.4% rise in 2023.
Winzar suggested that Australia must focus on the longer-term challenges holding it back, as inflation looks under control in the short term.
“We hope the Albanese Government’s recently announced productivity roundtable yields tangible policy outcomes that can lift us out of this funk,” Winzar said.
“CEDA has long been calling for tax reform to be part of the Federal Government’s agenda, and this report makes the need even more clear, given our consistently high levels of company and personal income taxes (ranked 59th and 58th respectively).
“The uncertainty caused by US President Donald Trump’s trade war and growing international conflict only strengthens the need to tackle these challenges to help the economy weather these storms.”
Australia’s worst ranking was entrepreneurship, which dropped to 68th out of 69 nations.
“Along with poor perceptions of the efficiency of our large corporations (62nd) and another fall in perceptions of workforce productivity (60th), this report also highlights the important role that Australian businesses play in driving national competitiveness and productivity,” Winzar said.
“We also ranked a relatively disappointing 54th [for] companies’ use of digital tools and technologies. Employers should enable and encourage workers’ adoption of AI tools where appropriate, including by providing training, to ensure we are not left behind.”
The top three countries were Switzerland, Singapore and Hong Kong.
