Australia's infrastructure continues to present a challenge to our economic performance.

While Australia's overall ranking had improved to 7th this year (up from 12th last year) of 55 countries surveyed, the improvement was marred by low scores for international trade (44th out of 55) and infrastructure (22nd out of 55). Other weaknesses include public finance and the labour market. (Note: Last year's result was affected by the move of News Corporation's company headquarters from Australia to the US.)

Positive results include the resilience of the economy to economic cycles, continued political stability, solid education standards and general awareness among Australians that further social and economic reform is needed.

Other challenges

Australia faces other challenges in the coming year. These included:

• Lifting work force productivity and participation to meet population ageing
• Development of a cost effective climate change policy
• Development of effective market mechanisms for efficient water allocation.

Number 1

The US is ranked number 1, followed closely by Singapore and then Hong Kong. WCY also notes that US dominance of the number 1 spot since 1993 may be about to end. The survey says that the structural deficits in the US ultimately need to be addressed and that a recession is a strong possibility. It concludes that "2008 will be rough".

Eastern European countries are among the biggest movers, particularly Poland and Slovenia, as are Thailand and Taiwan in Asia.