This year Australia climbed three spots in its competitiveness standing after in 2021 scoring its lowest ranking in 25 years.
Australia has been marked in 19th place for competitiveness by the Institute for Management Development (IMD), and 61st on entrepreneurship, following one of its lowest scores in the 30 years the list has been compiled.
Denmark achieved the top spot in this year’s list of 63 countries (it came 3rd last year), followed by Switzerland and Singapore in third place, according to metrics determining the future prosperity outlook for nations.
According to independent think tank the Committee for Economic Development of Australia (CEDA), Australia’s pandemic recovery and terms of trade were strengths affecting this year’s outcomes.
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CEDA CEO Melinda Cilento said ‘well-known’ weaknesses of Australia’s policy environment were holding the country’s back from being more competitive.
“Australia’s future competitiveness is not assured without lifting our game on areas such as technology, energy, skills and training, entrepreneurship, tax and productivity,” Cilento said.
“The rankings also suggest that Australia’s export concentration remains an area of vulnerability. Australia must lift its game on trade — diversifying its trading partners and continuing to build new markets for the goods and services in which we compete.”
This year Australia’s ranking also slumped across workplace productivity (dropping from 20th to 41st place) and real GDP growth (ranking 44th).
Australia performed strongest in terms of credit rating, coming in first place, and also on universal health coverage (3rd place) and investment in telecommunications (4th place).
“Australia’s terms of trade driven by strong commodity prices, employment numbers and pandemic recovery have saved the day — ensuring our international competitiveness ranking improved and did not slip further,” Cilento said.
“On the face of it, Australia’s short-term outlook is good but the IMD highlights that the critical pillars of competitiveness in a turbulent global environment are the institutional framework, infrastructure, and education — areas where Australia must now make very deliberate policy choices to underwrite future success.”
The IMD credited Denmark’s ‘aggressive’ sustainability-first approach as critical for its strong performance in the European market. This saw it consecutively increase its position on the rankings over the years from 6th to first place over five years.
World Competitiveness Center (WCC) research specialist Marco Pistis said this year Denmark lifted its performance across government efficiency metrics and performed ‘outstandingly’ in business efficiency (1st), productivity and efficiency (1st) and management practices (1st).
“Denmark’s economic performance has risen sharply, and this is driven by increases in investment flows in the country, a contained rise in prices compared to other developed economies and by the strengthening of public finances with a reduction in public debt and government deficit,” Pistis said.
WCC director Professor Arturo Bris noted the broad trend across national economies was that inflationary pressures were having a greater impact on businesses.
“From an economic point of view, the pandemic seems to be over. The big worry is inflation, at least in Europe,” he said.
The biggest challenges national economies had to contend with included different policies to address COVID-29 and Russia’s invasion of Ukraine.
“Globally speaking, those challenges having the biggest impact on the competitiveness of nations — to a greater or lesser degree — include differing national policies to address COVID (a ‘zero-tolerance COVID’ policy versus a ‘moving on from COVID’ one) and the invasion of Ukraine by Russia,” the center’s chief economist Christos Cabolis added .
In the WCC’s survey of Australian executives found inflationary pressures, geopolitical conflicts and supply chain bottlenecks were the most important trends to impact business this year.
This article was first published by The Mandarin.