Global Competitiveness Index reflects improved world economy
For the fifth year in a row, Switzerland ranks as the most competitive country in the world. It is followed by Singapore, Finland, Germany and the United States, which this year reverses a four-year downward trend. The World Economic Forum’s Global Competitiveness Index finds three sub-Saharan African countries – Burundi, Guinea, and Chad – holding up the bottom of 148 countries surveyed.
The study provides grounds for optimism that the global economy may finally be stabilizing following the freefall of recent years. The Global Competitiveness Index notes some of the southern European countries, in particular Greece and Spain, are moving up in the rankings after several years of decline.
The World Economic Forum chief economist, Jennifer Blanke, says this might indicate the reform process, which has been under way for the past couple of years, is starting to bear fruit.
She says a number of things that were of great concern a year ago have not come to pass. She notes, for example, the predicted breakup of the eurozone did not happen and the United States did not hit the debt ceiling.
“Really, we are seeing signs of life in the global economy. But, at the same time, things are slow. You still see a number of European and other advanced economies struggling,” Blanke said. “You see a slowdown among the developing countries. And so, I think our main message coming out this year is the importance of ‘You know, it is great we have got over the short-term firefighting, but now let us get back to business in terms of the sorts of reforms that are needed.’ So, loosening up labor markets, making them more effective, and things of that nature.”
Blanke says prospects for the economy going forward are good if governments get back to the hard work of attacking some of these structural issues.
The United States, which has dropped in the WEF’s rankings for the past four years, is finally making a turnaround. This year it has moved up two places into fifth position. The report attributes the U.S. rise in the rankings to a perceived improvement in the country’s financial markets, as well as greater confidence in its public institutions.
Blanke says the United States continues to be an innovation powerhouse and this is important in terms of getting goods to market and pushing productivity forward.
“So a lot of good things, a lot of good news for the U.S. this year. On the other hand, the macro-economic picture continues to be worrisome-debts, deficits, unfunded liabilities,” she said. “So, these are all things we continue to be worried about going forward.”
The report says some of the world’s largest emerging market economies must get business and government to implement long-overdue reforms. It says China continues to lead the five so called BRICS countries in the competitiveness rankings, followed by South Africa, Brazil, India and Russia.
The picture in the Middle East is mixed. On the one hand, Gulf countries like the United Arab Emirates and Qatar are doing well in the rankings. On the other hand, the report notes the high degree of uncertainty and political turbulence in the region is having a negative impact on competitiveness.
Conflict-ridden Syria does not figure in this year’s report because researchers were unable to gather needed data. Egypt, another country in turmoil, dropped 11 places from last year’s index, to the 118th spot.
The report says Latin America continues to suffer from low rates of productivity despite robust economic growth in previous years.
In sub-Saharan Africa, 45th-ranked Mauritius has overtaken 53rd-ranked South Africa as the region’s most competitive economy. The report notes only eight countries in the region feature in the top 100, which indicates great efforts need to be made to improve Africa’s competitiveness.