Australia recovered by one place in this year’s global ranking of international economic competitiveness, according to the Swiss-based Institute for Management Development’s (IMD’s) World Competitiveness Yearbook 2026. IMD has assessed and ranked the prosperity and competitiveness of the world’s largest economies since 1989. CEDA partners with IMD in Australia to compile this valuable annual report. 

Australia stepped up from 18th to 17th place in 2026, when ranked against 70 peer economies. Despite this small improvement, this year’s result remains well below Australia ranking of 13th place in 2024, which was our best performance since 2011. 

Within the Asia-Pacific region, Australia was ranked 6th overall out of 15 regional peer economies in 2026, down from 5th place in 2025 and 4th place in 2024.  

These results confirm that Australian policymakers must focus on supporting economic growth, business resilience and productivity, while also containing inflation and reducing business costs, including the cost of regulatory and reporting burdens. 

The detail 

For Australian businesses, our underlying economic strengths include: direct investment inflows (8th most competitive); employment in services (12th); and pension funding (i.e. superannuation, 13th). These are outweighed however, by persistent inflation problems (45th in 2026, down from 38th in 2025). For example, the cost of office rents ranked 61st, apartment rents ranked 59th and mobile phone costs were 57th. Australia’s economy also continued to rank poorly for economic complexity (54th) and export market concentration (61st). These high costs and trade concentrations represent real barriers to better business competition and efficiencies. 

Australia’s ‘business efficiency’ ranking recovered to 22nd in 2026 (the same as 2024), mainly due to improved scores in finance, credit availability and corporate governance.  

2026 also saw improvements in some but not all private-sector workforce indicators. Skill-related concerns that continue to weigh on business efficiency include entrepreneurship (54th), company agility (50th), workforce productivity (45th), employee training (40th), management credibility (42nd) and management practices (36th). These scores align with CEDA research pointing to the urgency of lifting our managerial agility and skills. 

With regard to new technologies, Australia ranked a very average 32nd for access to AI and 28th for AI skills, and only slightly better for AI investment (21st) and cybersecurity (22nd). Australia’s employers must continue to enable adoption of AI tools where appropriate, including by providing workforce training, to ensure we are not left behind. 

The global leaders 

Singapore returned to top spot as the most competitive economy globally in 2026, with an especially strong performance in business efficiency (1st) making up for weaker rankings in government efficiency (3rd) and infrastructure (5th). Hong Kong moved back into second place while Switzerland slid from first to third place due to weaker jobs and investment. The USA re-entered the top 10 this year in 10th place (up from 13th), displacing Qatar, due to its performance in jobs, investment and stock markets. 

Other nations in the top 10 were broadly unchanged. They included Denmark (6th) and Sweden (9th), but other Scandinavian favourites of past years slid further away from the top rankings, with Norway (18th) and Finland (19th) now ranked just below Australia.  

The IMD notes that the Scandinavian economies still rank highly for institutional, legal and policy stability, but they are carrying higher fiscal burdens with weaker jobs growth. Their fall underscores the importance of maintaining an agile, resilient and profitable private sector that can sustain the public services that communities demand.  

The future  

Looking ahead, this year’s IMD Yearbook highlighted five ongoing challenges for Australia’s economy: 

1. Addressing resurgent inflation and cost-of-living pressures;
2. Addressing housing affordability and supply constraints;

3. Accelerating the clean energy transition;
4. Restoring productivity growth; and
5. Strengthening economic resilience and agility in response to global uncertainty.