The new IMD World Competitiveness Ranking demonstrates the Covid-19 pandemic’s impact on economic competitiveness. Countries like China, which handled the crisis well, rose in ranking while countries that struggled to contain the virus, including Singapore, fell.
The World Competitiveness Ranking, published by the Institute for Management Development’s (IMD), first published in 1989, assesses and ranks 64 countries globally on their economic competitiveness. Rankings are determined based on research data and survey responses from executives.
Singapore loses top spot
Several top Asian economies changed places in the newly-released ranking. For the past two years, Singapore has held the top spot. This year, however, it was dethroned by Switzerland and fell to fifth place, behind Sweden, Denmark, and the Netherlands.
In terms of individual criteria, Singapore remained the top country in terms of economic performance, though. IMD cited job losses, lack of productivity, and the pandemic’s economic impact as some of the factors that caused a decline in Singapore’s overall ranking. Additionally, IMD highlighted the increase in both government deficit and public debt as reasons for the city-state’s weaker employment growth and significant worsening in public finances.
In response to the decline in ranking, Singapore’s Minister for Trade and Industry Gan Kim Yong said the government would review the report and improve the country’s competitiveness. He called on Singapore businesses to seek new opportunities and asked workers to constantly upgrade their skills to maintain relevance. Despite the fall in the global ranking, Singapore remains the top Asian economy in terms of competitiveness.
China jumps while Hong Kong slides down
China exhibited the highest leap among Asian countries, landing at 16th this year – from 20th in last year’s ranking. IMD World Competitiveness Centre’s chief economist Christos Cabolis explained that the key drivers to China’s rise in the ranking are its “post-pandemic economic performance and outstanding management of the virus”.
China showed improvements in four categories, namely economic performance, government efficiency, business efficiency, and infrastructure. The country moved from seventh to fourth in economic performance and from 37th to 27th in government efficiency. China also improved slightly from 18th to 17th in business efficiency and from 22nd to 18th in infrastructure.
Meanwhile, Hong Kong fell from fifth last year to seventh in the current ranking. It remains a global leader in government efficiency, but its rankings in the other categories are slightly down.
Responding to the news, a government spokesperson said it suggests recognition of the special administrative region, particularly in upholding its institutional strengths. The spokesperson added that the government is confident in its “long-term economic development and competitiveness.”
Taiwan with best ranking since 2013
Taiwan in this year’s IMD World Competitiveness Ranking went up by three spots from 11th to become the eighth most competitive economy. This is the country’s best ranking since 2013 when it ranked seventh.
According to IMD, Taiwan improved in all four areas, ranking sixth from 17th in economic performance, eighth from ninth in government efficiency, seventh from 12th in business efficiency, and 14th from 15th in infrastructure.
The Philippines fell by seven places from 45th to 52nd, marking the biggest decline among Asia-Pacific countries. This is also the country’s worst performance in the last five years. According to IMD, it is caused by the country’s subpar handling of the pandemic and the surge in unemployment.
The Philippines ranked 13th out of the 14 Asia-Pacific economies included in the rankings, just staying ahead of Mongolia. The country fell by 13 places in economic performance, four places in business efficiency, and three places in government efficiency.
The IMD believes that the Philippines must establish resilient social infrastructure, particularly in health and education, to ensure inclusive economic recovery and manage Covid-19 cases while improving vaccine rollout.
Meanwhile, both India and South Korea maintained their previous rankings in the list. India remained in 43rd place for the third consecutive year but improved in terms of government efficiency.
IMD attributes this improvement to stable public finances despite the impact of the pandemic and positive feedback from Indian business executives about government support and subsidies to private companies. However, the IMD warned that India’s short-term economic performance would greatly depend on its pandemic response.
South Korea, on the other hand, maintained its 23rd ranking this year. While the position was unchanged, the country’s strong exports and investments boosted its economic performance ranking by nine places to 18th. However, its government efficiency ranking fell by six spots from 28th to 34th.