Ireland’s competitiveness has slumped more than any other country in the top 20, bar Australia, over the past year, according to the latest IMD World Competitiveness Centre’s annual report.
The report measured 69 global economies in 2025, assessing government efficiency, infrastructure, economic performance and business efficiency.
Canada, Germany, and Luxembourg showed the greatest improvements among the 20 most competitive economies worldwide while Australia and Ireland showed the greatest declines.
Ireland fell three places in the rankings from fourth to seventh. It enjoyed a ranking as high as second in 2023. Australia fell five places to 18th this year.
Ireland’s biggest drop was in terms of “business efficiency” where it sank from third to 11th. Within that subset, the most significant dip was in terms of “productivity and efficiency” where it fell 16 places to 22nd.
Switzerland reclaimed the top spot (up one place), followed closely by Singapore (down one) and Hong Kong SAR (up two), “reflecting their strong performance in global indicators of quality of life”, the report said.
The report added that Ireland and the Netherlands, though still within the top 10, “show signs of strain in productivity and investment flows, likely the result of the volatility of global capital and the importance of sustained innovation”.
“Small, agile European economies continue to demonstrate that size is not the determining factor of economic competitiveness if governance is effective and policy is coherent,” it said.
IMD director Arturo Bris said: “The top 10 economies all maintain strong institutional frameworks, robust infrastructure and adaptive governance models, which is what is required to remain competitive in today’s fragmented world in which currency risk has become a strategic priority, together with protecting domestic needs.”
The report said “traditional determinants of competitiveness”, namely macroeconomic stability, business-friendly environments, and quality infrastructure, “remain necessary but [are] no longer sufficient”.
“Institutional quality is not merely an administrative feature but a strategic asset,” it said.
“Countries that combine institutional strength with inclusive outcomes are able to withstand external shocks without yielding to internal fragmentation.
“In contrast, those that overlook institutional reform risk deepening social divisions and losing their competitiveness levels.
“As such, policymakers and business leaders must view government efficiency not as a governance ideal, but as a practical requirement for sustaining economic resilience and investment appeal in the years ahead.”
