For the first time in the 19-year history of the Independent Australia Ranking on Economic Management (IAREM), Denmark has claimed the title of the world’s best-performing economy. The results mark a historic milestone for a country long admired for its social model but now also recognised as a global economic leader.
Denmark leads the 2025 global list with an IAREM score of 30.29, edging out other high-performing economies:
- Denmark – 30.29
- Norway – 29.3
- United Arab Emirates – 25.12
- Luxembourg – 21.26
- Australia – 19.4
- Switzerland – 19.08
- Ireland – 19.01
- Oman – 18.78
- Hong Kong – 17.84
- Malta – 16.86
This ranking, compiled from data by the IMF, World Bank, UBS and Trading Economics, tracks eight key economic indicators: income per person, GDP growth, wealth per adult, employment, inflation, tax burden, government debt, and budget balance.
While Scandinavian neighbours Norway and Switzerland continue to perform strongly, Denmark’s rise is especially notable given its small size, high taxes, and lack of significant oil or gas reserves.
A remarkable climb to the top
Denmark’s rise has been nothing short of extraordinary. As recently as 2015, the country ranked outside the top 30. By 2019, it had reached 20th place. In the six years since, its economic trajectory has been sharply upward, from 5th in 2023, 2nd in 2024, to 1st in 2025.
This improvement has come during the Social Democrats’ current six-year term, part of nearly 11 years in power this century. Their approach has focused on strategic investments, labour reforms, and sustainability.
Denmark’s success model centres on strong collective bargaining through unions, ensuring high wages without a legislated minimum, green transition, especially in wind energy, which has reduced energy costs, booming exports, particularly in pharmaceuticals and medicinal products, or urban cycling infrastructure, which may seem quirky but has real economic benefits.