Australia falls on worldwide AI adoption and readiness, new data shows

Australia has risen three places in an international ranking of digital competitiveness, with strong gains in talent, investment and public leadership, but has slipped on AI adoption and readiness.  

Australia ranked 16th in the 2026 IMD World Digital and AI Ranking of 70 countries, released today, up from 19th in 2025. 

Produced by the IMD’s World Competitiveness Center, the ranking measures how well economies adopt, deploy and govern digital technologies and AI, using 88 criteria from hard data and an executive survey across governance, technology, efficiency, workforce development and values. 

IMD has rebuilt the former World Digital Competitiveness Ranking this year, replacing its three factors (knowledge, technology and future readiness) with five (governance, technology and infrastructure, efficiency, workforce development, and values), adding new AI-specific indicators and restating earlier years’ results on the new basis. 

Among comparable economies, Australia ranked behind Canada (5th) but ahead of the United Kingdom (17th), Germany (18th), Japan (19th) and New Zealand (26th). 

However, Australia remains below the 12th place it held in 2022. 

“It is encouraging to see Australia move back up the rankings, with strong gains in talent, investment and the quality of our public institutions,” Melinda Cilento, CEO of CEDA said. 

“But we are still short of where we were in 2022, and on the measures that matter most for turning AI in productivity, we are going backwards. 

“That’s a problem for a nation and government with the ambition to move up the AI value chain and ignite stagnant productivity growth.  

Australia improved on three of the ranking’s five factors: governance (up from 10th to 6th), technology and infrastructure (22nd to 15th) and workforce development (15th to 10th). 

Among the largest gains were talent (up from 18th to 4th), and capital and AI investment (42nd to 27th). Public leadership rose from 10th to 3rd, driven by core government systems and publicised laws and government data. 

Efficiency remained Australia’s weakest factor, unchanged at 29th. Headline business agility improved from 46th to 36th, but Australia ranked just 50th for the agility of companies and 46th for the use of big data and analytics - two subcomponents of business agility.  

“We rank 49th for digital and technological skills, 40th for employee training and 30th for companies investing in AI training. CEDA research has consistently highlighted that lifting these skills is essential if AI is to deliver for workers, businesses and the broader economy,” Melinda Cilento added. 

“We also need to make the most of the skilled migrants and international students we attract, by recognising their skills and experience and matching them to jobs that use them.” 

Trust and governance are also holding Australia back. Australia ranked 35th for citizen trust in AI and 32nd for AI policies passed into law, while digital and AI governance fell from 9th to 20th. 

“Building confidence in AI, among businesses and the community, will be critical to reaping the benefits. That means clear and consistent settings that manage the risks without holding back innovation,” Melinda Cilento said. 

Overall, the results are consistent with CEDA research highlighting the need to: streamline excessive and fragmented regulation; improve access to and use of data across the country; lift the dynamic capabilities of Australian businesses; address poor skills matching and utilisation of international skills and experience; and reverse the decline in work-related training in Australia. 

Globally, the United States topped the ranking this year, while Singapore was second and the Netherlands came in third. Singapore was the only economy to place in the top five on all five factors.