Singapore is now the world’s most competitive economy after overtaking the United States, which was last year’s number one in the World Economic Forum (WEF)’s Global Competitiveness Index (GCI).
The annual GCI ranks 141 economies through 103 indicators organized into 12 pillars: institutions, infrastructure, information and communications technology (ICT) adoption, macroeconomic stability, health, skills, product market, labor market, financial system, market size, business dynamism, and innovation capability.
According to the index, Singapore earned an overall score of 84.8 in 2019, up from last year’s 83.5.
The city-state ranked first on three pillars: infrastructure, health, and labor market. It also came in second for institutions, product market, and financial system.
Singapore scored full marks on the pillar for health, which is an assessment of health-adjusted life expectancy.
The republic also scored close to full marks (99.7) on macroeconomic stability but was ranked 38th because 35 other economies, including Malaysia, scored a perfect 100.
The US, which remains the world’s most competitive large economy, saw its overall score decline from 85.6 in 2018 to 83.7 in 2019.
While the WEF acknowledged that the US “remains an innovation powerhouse” and the world’s second most competitive economy, it highlighted some trouble signs faced by the US economy.
“There are no two ways (about) it. It is important to ensure the countries are being open to trade,” said Saadia Zahidi, a WEF managing director, when asked to comment on the repercussions of the tariffs levied by the Trump administration.
Nevertheless, the US ranks first on the pillar of business dynamism and second on the innovation capability pillar.
At the third place on the GCI is Singapore’s longtime rival Hong Kong, which saw its ranking rise one spot with an improved score of 83.1 from 82.3 in 2018.
In May this year, Singapore was also named the world’s most competitive economy, surpassing Hong Kong and the US in the World Competitiveness Ranking compiled by Swiss business school IMD.
The most improved economy in the WEF’s index this year was Vietnam, which rose ten places from 2018 to the 67th spot this year.
On average, the 141 economies scored a meager 61 points over 100. “This global competitiveness gap is of even more concern as the global economy faces the prospect of a downturn,” the WEF said.
Despite that, some of this year’s better performers – including Singapore and Vietnam – appear to be benefiting from trade tensions through trade diversion, the WEF added.
In a statement, the WEF conceded that the last ten years saw global leaders take rapid action to mitigate the worst of the financial crisis. However, it argued that this alone has not been enough to boost productivity growth.
Noting that monetary policies are running out of steam, the WEF urged policymakers to revisit and expand their toolkit to include a range of fiscal policy tools, reforms, and public incentives.