Weak economy drags down Australia’s competitiveness ranking

Australia has dropped five places in a global ranking of international competitiveness due to our slow economic growth and a drop in business efficiency.

The nation fell from 13th to 18th in the IMD World Competitiveness Yearbook 2025, which ranks the competitiveness of 69 nations, released today.

Last year’s ranking was Australia best performance since 2011.

“This result shows Australian businesses and policymakers should focus on measures to strengthen the economy, in particular reviving our flagging productivity,” CEDA Chief Economist Cassandra Winzar said.

Australia’s overall economic performance fell from 7th to 16th, while business efficiency – which includes criteria such as productivity, management practices and labour market – dropped from 22nd to 37th.

We dropped from 20th to 60th in real GDP growth per capita, reflecting our relatively soft economic growth and high population growth in comparison to other nations over 2024.

“With inflation looking to be under control in the short-term, we must now tackle the longer-term challenges holding back our economy,” Ms Winzar said.

“Key to this is lifting weak productivity through measures such as streamlining regulation, encouraging business investment and undertaking broad-based tax reform.

“We hope the Albanese Government’s recently announced productivity roundtable yields tangible policy outcomes that can lift us out of this funk.

“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 strengthen the need to tackle these challenges to help the economy weather these storms.”

Australia’s worst result remains its poor levels of entrepreneurship, which dropped to 68th of 69 nations this year.

“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,” Ms Winzar said.

“We also ranked a relatively disappointing 54th on 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.”

Overall, Switzerland reclaimed the top ranking in 2025, followed by Singapore, with Hong Kong rounding out the top three.

The rankings are part of the Swiss-based Institute for Management Development’s (IMD’s) World Competitiveness Yearbook 2025, which has ranked the prosperity and competitiveness of countries since 1989.

The yearbook’s rankings are based on four main factors: economic performance, government efficiency, business efficiency and infrastructure.

CEDA is the yearbook’s Australian partner.

CEDA Chief Economist Cassandra Winzar is available for further comment and interviews.

Media contact:
Justine Parker, Media Manager and Content Specialist
Mobile: 0436 379 688 | Email: justine.parker@ceda.com.au