Australia’s GDP Growth per Capita Plunges From 20 to 60th in Global Rankings

Australia has fallen five spots to 18th place in the World Competitiveness Yearbook 2025, slipping from 13th last year among 69 economies.

The yearbook, released by the International Institute for Management Development (IMD) in partnership with the Committee for Economic Development of Australia (CEDA), attributes the decline to sluggish economic growth and deteriorating business efficiency.

Although Australia dropped to 18th this year, its 13th-place ranking in 2024 had been its strongest performance since 2011.

The IMD rankings assess countries across four key areas: economic performance, government efficiency, business efficiency, and infrastructure.

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

Australia’s economic performance plunged from seventh to 16th, while business efficiency took a steeper dive, from 22nd to 37th.

The country’s real GDP growth per capita saw a dramatic drop from 20th to 60th, reflecting modest economic growth compounded by rapid population increases in 2024.

A particularly stark fall was recorded in productivity and efficiency, where Australia slipped from 28th to 49th.

However, it retained relatively strong positions in international investment (11th), employment (12th), finance (12th), health and environment (12th), and education (13th).

“With inflation looking to be under control in the short-term, we must now tackle the longer-term challenges holding back our economy. Key to this is lifting weak productivity through measures such as streamlining regulation, encouraging business investment and undertaking broad-based tax reform,” said Winzar. 

Entrepreneurship Ranking Among Lowest

One of the more troubling indicators for Australia was its entrepreneurship ranking, where it came in at 68th out of 69, one of the lowest globally.

Winzar also pointed to poor perceptions of the efficiency of large corporations (62nd) and a further decline in workforce productivity perceptions (60th) as areas needing urgent attention.

Australia placed 59th in company taxes and 58th in personal income taxes, underscoring the system’s impact on competitiveness.

CEDA has long called for comprehensive tax reform, and the report reinforced this need.

The findings were released ahead of Treasurer Jim Chalmers’ address to the National Press Club on June 18, where he outlined three key reform priorities for the Albanese government’s second term: productivity, budget sustainability, and economic resilience.

The rankings also precede Prime Minister Anthony Albanese’s planned productivity roundtable in August.

The event will bring together business groups, unions, civic leaders, and the Productivity Commission to explore potential reforms, including faster project approvals and a potential tax overhaul.

The Productivity Commission is currently engaging with industry stakeholders to delve into 15 priority areas, including AI regulation.

On the global front, Switzerland claimed the top spot in the 2025 competitiveness rankings, followed by Singapore, Hong Kong, and Denmark.

Winzar added that ongoing global uncertainty, including the legacy of U.S. President Donald Trump’s tough, America-first trade policies, further underscores the urgency of boosting domestic economic resilience.