Singapore dethrones US as most competitive economy

Thanks to advanced tech infrastructure, skilled labour, immigration laws, and business efficiency.

Singapore ranked as the world's most competitive economy for the first time since 2010, the IMD World Competitiveness Rankings revealed. “The United States slipped from the top spot, whilst economic uncertainty took its toll on conditions in Europe,” it said.

Singapore's rise from the third spot to the top was driven by its advanced technological infrastructure, the availability of skilled labour, favourable immigration laws, and efficient ways to set up new businesses, IMD said. Hong Kong held on to second place, helped by a benign tax and business policy environment and access to business finance.

On the other hand, the initial boost to business confidence from President Donald Trump's first wave of tax policies appears to have faded in the United States, weighing on the country’s economic competitiveness according to IMD. “Whilst still setting the pace globally for levels of infrastructure and economic performance, the competitiveness of the world's biggest economy was hit by higher fuel prices, weaker hi-tech exports and fluctuations in the value of the dollar,” it said.

Singapore aced the categories of economic performance and business efficiency and ranked fifth in both categories. The Asia-Pacific region had 11 out of 14 economies either improving or holding their ground, led by Singapore and Hong Kong.

Indonesia leapt 11 places to 32nd thanks to increased efficiency in the government sector as well as improvement in infrastructure and business conditions. It is country is characterised by the lowest cost for labour across the 63 economies studied, IMD said.

Thailand, driven by an increase in foreign direct investments and productivity, advanced five places to 25th position in 2019. Japan fell five places to 30th hampered by a sluggish economy, government debt and a weakening business environment.

On a global scale, Switzerland climbed to fourth place from fifth, helped by economic growth, the stability of the Swiss franc and high-quality infrastructure. The Alpine economy ranked top for university and management education, health services and quality of life.

The effects of rising fuel prices influenced the ranking, with inflation reducing competitiveness in some countries. Stronger trade revenues helped oil and gas producers such as this year’s biggest climber Saudi Arabia, which jumped 13 places to 26th, and Qatar, which entered the top 10 for the first time since 2013.

The United Arab Emirates – ranked 15th as recently as 2016 – entered the top five for the first time. The UAE now ranks first globally for business efficiency, outshining other economies in areas such as productivity, digital transformation and entrepreneurship.

Venezuela remains anchored to the bottom of the ranking, hit by hyperinflation, poor access to credit and a weak economy. The South American economy ranks the lowest for three out of four of the main criteria groups – economic performance, government efficiency and infrastructure.

The IMD World Competitiveness Rankings, established in 1989, incorporate 235 indicators from each of the 63 ranked economies. The ranking takes into account a wide range of “hard” statistics such as unemployment, GDP and government spending on health and education, as well as “soft” data from an Executive Opinion Survey covering topics such as social cohesion, globalisation and corruption.