Australia has tumbled out of the top 20 most digitally competitive nations for the first time after a lack of AI policy and complacent companies dragged on global rankings for technology and future readiness.
The rankings, released annually by the International Institute for Management Development (IMD), place Australia at 23rd in 2025, down from 15th last year and 10 spots back from a 2018 high.
The Swiss-based business school’s lowest ever ranking of Australia also comes with a warning that trade exposed nations can fall further still because of churning global trade.
Australia’s biggest drops in the new ranking came from technology and future readiness factors, with steep falls in year-on-year sub factors like regulatory framework, down from 5th in the world to 18th.
This regulatory framework fall was driven mostly by the ‘AI policies passed into law’ factor plummeting to 34th.
AI policy had been a bright spot for Australia (8th) last year when it was added to the rankings and helped offset traditional technology barriers.
At the time, the Albanese government’s guardrail reforms looked set to deliver certainty through an AI act, or at least some sort of risk-based approach to regulation. Related reforms like privacy and automated decision-making legislation were also progressing.
But progress on each of these areas slowed in 2025, with the government now reconsidering its approach to AI guardrails to preserve productivity gains from the technology.
The Albanese government has promised a new AI policy by the end of the year to mitigate harms and drive adoption.
Investment for technology is also a concern, based on the new rankings, with Australia falling from 19th to 37th in the capital category. Rankings for venture capital, banking, and funding for technological development all dropped sharply.
Business bind
The IMD digital competitiveness ranking also factors in a nation’s ‘future readiness’ based on attitudes to adapting digital, the agility of businesses in each nation and the integration of information technology.
Australia slipped in each, but the biggest fall came in business agility. Australian businesses are now some of the least agile in the world (65th of 69th) and some of the worst equipped to quickly respond to threats and opportunities (57th).
CEDA chief executive Melinda Cilento said the falls in business agility and in education and training are particularly concerning.
“We tumbled to 60th on employee training and 59th on international experience of talent. In other words, Australia is neither adequately training employees, nor properly recognising international qualifications and experience,” she said.
“This risks leaving us behind in the adoption of technologies amid rapid change brought on by AI.”
The most digitally competitive country in the world is Switzerland, followed by the US and Singapore, thanks to strong Infrastructure, talent, and innovation ecosystems, the IMD found.
But the traditional powerhouses face new disruptions from rising trade tensions and fragmentation.
“Those economies most shielded from the effects are leapfrogging ahead in our digital ranking,” said IMD director Arturo Bris.
“One example is Qatar, which is up six places since last year. In contrast, economies highly affected by the twists and turns of trade in 2025 are experiencing a battering in their digital competitiveness. Australia is a case in point – eight places lower in our ranking than it was last year.”
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