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Australia’s competitiveness falls to 2-decade low
Despite a strong economic recovery from the COVID-19 pandemic, Australia’s global ranking on competitiveness has fallen to a 25-year low, as an overreliance on the mining sector and a lack of climate resilience see Australia fall behind its global peers.
Australia’s competitiveness falls to 2-decade low
Despite a strong economic recovery from the COVID-19 pandemic, Australia’s global ranking on competitiveness has fallen to a 25-year low, as an overreliance on the mining sector and a lack of climate resilience see Australia fall behind its global peers.
Judged on economic performance, government efficiency, business efficiency and infrastructure, Australia has fallen four places in the latest results.
The latest IMD World Competitiveness Yearbook 2021 now ranks Australia 22nd out of the the 64 nations measured as part of the study.
Australia’s business competitiveness has slipped due to the country ranking poorly on company agility, entrepreneurship and management credibility.
One of the main drivers in Australia’s recovery, the mining sector has worked against Australia when it comes to competitive ranking, with the lack of sophistication of its exports acting as a headwind for Australia's rankings.
CEDA chief economist Jarrod Ball said Australia’s fall in ranking shows the country cannot “waste time getting match-fit in a post pandemic era”.
“We are among the lowest-ranked of 64 nations on company agility, entrepreneurship, customer satisfaction and credibility of managers,” he said.
“But it is not just our management practices that are deteriorating. Our heavy reliance on mineral resources and a narrow set of markets sees us rank in the 50s for our export sophistication.
Mr Ball particularly highlighted Australia’s 11th place fall on technological infrastructure, which now sees the country in 44th position for ICT services.
“Governments also need to play their part,” Mr Ball said. “Australia’s tax regime is called out in the survey as a drag on competitiveness, with Australia ranking 54th and 57th, respectively, for its corporate and personal income tax burdens.”
He also pointed to Australia’s poor ranking on energy infrastructure, which showed Australia ranks close to the bottom (56th) of the category.
“We must boost our climate resilience and regain our energy advantage,” Mr Ball said.
“The federal government should commit Australia to net zero by 2050 and announce more ambitious policies to get us there.”
However, he pointed out Australia’s continuing wins on the health front can help reverse the damage, including a faster COVID-19 vaccine rollout and fit-for-purpose quarantine facilities to help in the safe reopening of international borders.
“On the positive side, Australia limited the economic damage of COVID-19 far more than other economies, which saw us move up the rankings on economic performance,” he said.
Overall, Switzerland rose to first place from third in 2020, while Sweden jumped from sixth to second and Denmark slipped one place to third. Rounding out the top five, the Netherlands remained in fourth place, while Singapore dropped from first to fifth in 2021.
The report found that globally, this year highlighted the importance of “innovation, digitalisation of the economy, welfare benefits and social cohesion”.
“Highly competitive countries have been able to tackle these challenges by strengthening their institutional and social frameworks,” the report found.
It also found that “trends in highly ranked economies show that the health and education systems remain at the core of competitiveness, contributing to having successfully endured the pandemic – so far”.
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