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Korea plummets seven spots to 27th in World Competitiveness Ranking

Published: 17 Jun. 2025, 18:17 Updated: 17 Jun. 2025, 19:06

Buildings in a major business district are seen from Mount Namsan in central Seoul on Feb. 21. [YONHAP]

Korea plummeted seven spots to 27th place in this year’s World Competitiveness Ranking by the International Institute for Management Development (IMD), marking its sharpest fall down the list since joining in 1997.

The drop, announced on Tuesday by the Ministry of Economy and Finance, was largely driven by worsening perceptions of Korea’s business environment among global executives, who ranked the country significantly lower in areas such as corporate agility, responsiveness and infrastructure.

The IMD's 2025 World Competitiveness Ranking showed Korea slipping from 20th last year. The Swiss-based institute assesses economies across four key pillars: economic performance, government efficiency, business efficiency and infrastructure. This year’s rankings reflect 2024 statistics and survey responses from global business leaders collected between March and May of this year.

Korea’s sharp fall was attributed primarily to poor evaluations in survey-heavy categories, notably business efficiency and infrastructure. Business efficiency plummeted from 23rd to 44th, suggesting global business leaders increasingly view Korea as a challenging environment in which to operate.

Survey-based subcategories such as the “business agility” plummeted from ninth to 46th place, while “response to opportunities and threats” slid from 17th to 52nd. Analysts attributed this to rising concerns over the protectionist policies of U.S. President Donald Trump, including escalating tariff threats that pose significant risks to Korean exporters.

In contrast, government efficiency improved, climbing from 39th to 31st. Corporate tax burdens eased slightly, pushing Korea’s tax policy subcategory from 34th to 30th, while fiscal policy rose from 38th to 21st place.

Soldiers are seen attempting to enter the National Assembly building in Yeouido, western Seoul, on Dec. 4, 2024, after President Yoon Suk Yeol declared martial law. [YONHAP]

However, political instability continued to weigh heavily on Korea’s image. The “political stability” category fell from 50th to 60th, which observers linked to last year’s controversial martial law crisis instigated by former President Yoon Suk Yeol. The gender employment gap also widened, with Korea slipping from 21st to 33rd place in that indicator.

The presidential office attributed the overall ranking drop to “last year’s underwhelming performance and the political and economic uncertainty stemming from the constitutional crisis.”

“President Lee Jae-myung has consistently emphasized the importance of ‘genuine growth’ that enhances long-term potential,” presidential spokesperson Kang Yu-jung said in a written briefing. “The administration will implement concrete policies to restore national competitiveness.”

Incheon Port, a major export hub in Incheon, is seen on May 28. [YONHAP]

The government plans to reinvigorate the national competitiveness policy council under the Finance Ministry to improve Korea’s global standing.

“We will respond in a systematic, government-wide approach,” Kang added.

Globally, Switzerland claimed the top spot, rising from second last year, while Singapore fell to second. Hong Kong climbed from fifth to third.

Among Group of 7 economies, Canada ranked 11th, the United States came in at 13th, Germany at 19th, Britain at 29th, France at 32nd and Italy at 43rd.

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.
BY IM SOUNG-BIN [[email protected]]