Australia has slipped five places in a key international competitiveness ranking, falling from 13th to 18th position as sluggish economic growth and productivity weigh on the nation’s performance.
The drop in the International Institute for Management Development (IMD) World Competitiveness Yearbook, which ranks 69 countries, marks a sharp reversal from last year — the country’s best result since 2011.
The rankings, released by the Swiss-based business school and CEDA on Tuesday, come ahead of a speech from the Treasurer on Wednesday laying out the Albanese government’s second term economic agenda.
According to the yearbook, real GDP growth per capita saw the worst decline in 2025, falling from 20th to 60th place due to what CEDA said was relatively soft economic growth and high population growth when compared with other nations.
Economic performance and business efficiency – which includes measures like productivity, management practices and labour market – also weighed heavily on the result, which is only slightly better than in 2022.
But there were bright spots, with Australia ranking relatively well for international investment (11th), employment (12th), finance (12th), health and the environment (12th) and education (13th).
CEDA chief economist Cassandra Winzar said the result should prompt businesses and policymakers to focus on strengthening the economy, particularly addressing flagging productivity.
“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 of the IMD results.
“Key to this is lifting weak productivity through measures such as streamlining regulation, encouraging business investment and undertaking broad-based tax reform.”
Ms Winzar added that 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”.
With flatlining productivity one of the biggest challenges facing Australia, Treasurer Jim Chalmers will lay out the government’s second-term economic agenda in a speech to the National Press Club on Wednesday.
It follows a commitment by Prime Minister Anthony Albanese to hold productivity roundtables with business groups, the Australian Council of Trade Unions and the Productivity Commission.
The Productivity Commission is consulting with industry on the 15 productivity drivers deserving of further exploration, including the regulatory setting for artificial intelligence.
Ms Winzar also used the IMD findings to highlight Australia’s poor level of entrepreneurship, which has fallen to a new low (68th). The measure has been steadily declining in multiple IMD assessments for years.
Overall, Switzerland climbed one place to top the rankings in 2025, followed by Singapore, Hong Kong and Denmark. Singapore topped the list in 2024, while Denmark ranked first in 2023.
The results were broadly similar to last year’s IMD World Digital Competitive Ranking, which was topped by Singapore and Switzerland. Australia ranked 15th, up one place from 2023.
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