Jakarta. Indonesia's global competitiveness ranking fell eight places to 48th in 2026, extending a two-year decline as infrastructure gaps, limited financing sources, and concerns over energy security weighed on Southeast Asia's largest economy amid rising global economic tensions.

The annual World Competitiveness Ranking compiled by the International Institute for Management Development (IMD) showed Indonesia slipping from 40th place in 2025. The latest decline follows a sharp rise in previous years, when Indonesia climbed from 44th in 2022 to 34th in 2023 and reached 27th place in 2024.

The report cited global economic conditions and mounting risks to national energy security as major challenges facing Indonesia this year. The country also faces relatively stagnant economic growth, government budget realignment, inadequate infrastructure, human capital constraints, and limited financing availability.

Among countries with populations exceeding 20 million, Indonesia's ranking declined to 21st from 16th a year earlier. Within the Asia-Pacific region, the country fell to 14th place from 11th.

Globally, Singapore retained its position as the world's most competitive economy, followed by Hong Kong, Switzerland, Taiwan, the United Arab Emirates, Denmark, Ireland, the Netherlands, Sweden, and the United States, according to the IMD ranking.

Within Southeast Asia, Indonesia lagged behind several regional peers. Malaysia ranked 15th globally, Thailand placed 26th, and Vietnam came in at 27th. Indonesia's 48th position placed it only slightly ahead of the Philippines, which ranked 47th.

Despite the deterioration in overall competitiveness, the report identified economic performance as one of Indonesia's key strengths. The country recorded economic growth of 5.1% and maintained relatively low inflation, supporting domestic economic stability.

Indonesia ranked 10th globally for price competitiveness, 24th for domestic economy, and 28th for employment. International investment ranked 37th, while international trade stood at 50th.

Government efficiency produced mixed results. Tax policy emerged as one of Indonesia's strongest indicators, ranking 12th globally, while public finance ranked 25th. However, institutional framework fell to 50th place and social framework to 54th.

Business efficiency also showed weaknesses. Labor market performance ranked 21st, but the financial sector stood at 51st. Productivity and efficiency ranked 53rd, while management practices were placed 55th.

Infrastructure remained the country's weakest pillar. Basic infrastructure ranked 42nd, technological infrastructure 47th, and scientific infrastructure 48th.

Education performed particularly poorly, ranking 63rd globally, while health and environmental indicators placed Indonesia at 65th.