Singapore has maintained its ranking as the second most competitive economy behind Switzerland, the World Economic Forum (WEF) said on Wednesday.

Singapore is Asia's most competitive economy, featuring in the top 3 in seven of the 12 categories of the Global Competitiveness Index and appears in the top 10 of three others, the WEF said in its Global Competitiveness Report 2012-2013.

Singapore's public and private institutions are rated as the best in the world for the fifth year in a row.

It also ranks first for the efficiency of its goods and labour markets, and places second in terms of financial market development.

Singapore also came in second for world-class infrastructure, with excellent roads, ports, and air transport facilities.

The report said Singapore's competitiveness is reinforced by a strong focus on education, which has translated into a steady improvement in the higher education and training pillar in recent years, thus providing individuals with the skills needed for a rapidly changing global economy.

Switzerland topped the ratings, but some of its European neighbours are faltering and the US has slipped further down the ranking, according to the organisation which hosts the annual Davos pow-wow of business and political leaders.

Finland came in third, bumping Sweden to fourth place, followed by the Netherlands and Germany.

The United States, which just five years ago topped the WEF ranking, also continued its decline, falling to seventh place from fifth last year.

Britain, Hong Kong and Japan came next, completing the ranking of the top 10 most competitive economies.

"Switzerland earns the top spot in innovation, owing to the excellence of its education system, the high company spending on R&D (research and development), and the strong collaboration between the academic world and the business sector," the WEF said.

Switzerland, which topped the ranking for the fourth year running, was also lauded in several other areas, including as the world-leader in labour market efficiency, and for having one of the most stable macroeconomic environments in the world.

But the picture was not quite so bright for a number of other European countries and the United States.

While European countries, especially in the north, continue to dominate the list of the world's 10 most competitive nations, those in the southern part of the continent dipped further down the list.

Crisis-hit Greece, for instance, slipped to 96th place out of the 144 countries ranked, from 90th last year, while Portugal dropped to 49th from 45th place and Spain held its ground at 36th.

France also fell off the top 20 list, dropping to 21st place from 18th last year and 15th in 2010.

WEF economist Thierry Geiger told AFP this small but negative trend was worrying because it reflected a significant drop in French government efficiency in the past couple of years, as well as in the macroeconomic environment and especially labour market efficiency.

Though the United States came in seventh place, WEF senior economist Margareta Drzeniek Hanouz stressed that the economy "still has one of the most sophisticated business environments in the world."

However, she told AFP, the country is facing large "macroeconomic vulnerabilities", including the rising deficit, and at the same time severe political deadlock and a dwindling trust in politicians.

"This results in an inability to address some of the major problems they're facing," she said, stressing that the politician fatigue was directed at both of the country's main political parties.

China's competitiveness ranking dropped from 26th in 2011 to 29th this year.

WEF noted that some areas that have become critical for China's competitiveness include financial market development, technological readiness and market efficiency.

Despite the decline, China continues to lead the emerging BRICS economies by a wide margin.

According to the report, it is ahead of Brazil which was ranked 48th, South Africa at 52th place, India at 59th, and Russia at 67th.

Over in the Middle East and North Africa, Qatar at 11th place leads the region, while Saudi Arabia remains among the top 20 with its 18th ranking.

Klaus Schwab, WEF's founder and executive chairman, said: "Persisting divides in competitiveness across regions and within regions, particularly in Europe, are at the origin of the turbulence we are experiencing today, and this is jeopardising our future prosperity.

"We urge governments to act decisively by adopting long-term measures to enhance competitiveness and return the world to a sustainable growth path."

The WEF report was based on publicly available data and a survey of 15,000 business leaders in 144 countries.

channelnewsasia.com