Australia's competitiveness climbs world rankings

Stronger business and government investment, population growth and budget positions have seen Australia record its best international competitiveness ranking since 2011.

The nation rose from 19th to 13th in the IMD World Competitiveness Yearbook 2024, a global ranking of the competitiveness of 67 nations.

"While inflation and the cost of living are hurting households and businesses alike, this result shows Australia's economy has been comparatively resilient despite global and domestic pressures," CEDA senior economist Melissa Wilson said.

In addition, Australia's overall economic performance was positive seeing the nation rise from 10th to 7th in the world rankings.

"Strong international trade, high commodity prices and a comparatively healthy local economy have helped drive this welcome rebound in Australia's competitiveness," Wilson said.

"But the challenges we face have remained stubbornly fixed for many years now, with little sign of improvement. We must do more to diversify our economy and revive our weak productivity."

It wasn't all positive news for Australia though, with the country's worst result coming through from poor levels of entrepreneurship. Australia is ranked 61st out of 67 nations.

In addition, the cost of office rents is a rising challenge (60th).

"CEDA has long been calling for broad-based tax reform, and this report makes the need even more clear, given our consistently high levels of company and personal income taxes (ranked 57th and 55th respectively)," Wilson said.

"All parts of the tax system must be on the table - particularly the balance between taxing incomes and capital - if we want to be able fund critical services into the future while boosting investment and workforce participation."

Wilson said along with poor perceptions of the efficiency of Australia's large corporations (52nd), the report highlights the important role businesses have to play in driving national competitiveness and productivity.

"The lack of productivity growth remains a challenge if we want to maintain our living standards into the future. Both business and government need to do more to address this.

"We also ranked relatively low (37th) on the use of digital tools and technologies. We must do more to adapt to the growth of AI to ensure we are not left behind."

Quality-of-life measures remained strong, however there was a worrying dip in key indicators such as life expectancy and universal health coverage (down from 3rd to 8th and 9th respectively).

"Our improved competitiveness in this year's ranking is pleasing, but we must do more to address the longer-term challenges facing the nation, which are well-known and longstanding," Wilson said.

Overall, Singapore reclaimed the top ranking in 2024, followed by Switzerland, with Denmark rounding out the top three.