The Lowy Institute - a Sydney-based think tank - has released their fourth annual index, ranking 26 countries and territories according to the power they wield in the Indo-Pacific region.

Australia overall fared well after the index evaluated international power through 131 indicators across several measures - military capability and defence networks, economic capability and relationships, diplomatic and cultural influence as well as resilience and future resources.

Australia dropped 1.6 points from last year to be 30.8 points overall out of 100 but held its rankings across all eight measures of power in 2021.

It is classed as a "middle power" along with 15 other countries behind top ranked "super powers" United States (82.2pts) and China (74.6pts).

Australia fared best in the defence networks measure, where it placed second overall.

But it is trending down in military capability due to the AUKUS pact where it will acquire US and British technology to build a fleet of nuclear-powered submarines set to hit the water by 2040.

"A new AUKUS trilateral pact ... promises to create the bedrock for a future fleet of Australian nuclear-propelled submarines that will eventually allow the country to project power at long range into key theatres of the Indo-Pacific," the index report said.

"Nonetheless, Australia is trending down on military capability and has lost 2.7 points in its regional defence networks in 2021.

"The first development highlights the fact that the nuclear-powered boats will not arrive for perhaps two decades, during which time Australia's signature military capabilities will remain limited and its navy reliant on an existing fleet of ageing conventional submarines.

"The second is a reminder that the trilateral pact marks a deepening rather than a widening of Australia's regional defence networks."

Australia ranked fifth in cultural influence and resilience, sixth in economic relationships, seventh in diplomatic influence but was rated ninth in both future resources and economic capability.

It actually improved its resilience score with China's trade tariffs and informal sanctions offset by iron ore exports and trade diversion in other sectors.

But the index indicated Australia was also trending down in two key areas - diplomatic influence and economic relationships.

"After gaining ground last year, the country's comprehensive power is now approximately back to its pre-pandemic level," the report said.

The US was the only country to improve its overall score this year, with China dropping points for the first time.

Australian Associated Press