Victoria has now slipped behind the ACT, as well as NSW, in the latest CommSec State of the States report.
Contributing to the decline, the report noted that Victoria's business investment (through new plant and equipment) had fallen compared with the decade average.
By contrast, NSW and the ACT - which both outrank Victoria - saw business investment grow significantly.
The report notes that population growth and associated housing construction and retail spending is propping up Victoria's position.
Comments attributable to Michael O'Brien MP, Shadow Treasurer
"Labor's complete reliance on population growth to grow the economy is a dangerous gamble for Victorian jobs and the budget.
"Daniel Andrews' agenda of higher taxes, higher charges and wasteful government spending puts Victorian families at risk.
"Relying on population growth and record property taxes is not an economic plan. Yet this is all that Daniel Andrews and Labor offer Victorians.