The UAE has climbed eight places in the latest rankings of global competitiveness from the World Economic Forum (WEF), but its latest report says "serious doubts" remain about Dubai's public finances and the effect this will have on the country. "The UAE has in place the underlying fundamentals of a competitive economy," said the report, which lifted the UAE up to 23rd place in its overall rankings for this year.
The upgrade came despite a drop in the country's macroeconomic stability score based on its rising public debt and a narrowed budget surplus, factors that have also affected scores of other countries. "Serious doubts persist about the sustainability of public finances in Dubai and the potential effect a further deterioration may have on the country as a whole," it said. "As the global downturn continues to limit the availability of finance and reduces tourism and trade, the country's main sectors of activity are likely to be adversely affected."
Despite the fall in property prices, the UAE's financial markets have remained more resilient than those in many other countries. The country moved up eight positions to 33rd place for this category. Less favourable assessments of banks were made in the report, however, and the UAE slipped five places to 36th position for this section. The report also said that "consistent upgrading of institutions and infrastructure, and rising technological readiness and innovative capacity over the past few years" would help the UAE maintain its competitive edge in the longer term.
More emphasis would be needed on education, it said, with the UAE achieving relatively low scores for that sector. It would also need to improve the quality of its research institutions, which were relatively disconnected from universities and businesses. Qatar rose four places to 22nd place to lead the region, helped by its surpluses from energy exports. "The Middle East and North Africa region appears to be on average somewhat less affected by the global economic crisis than other emerging regions," the report noted.
Non-energy exporting countries indirectly benefited from the boom, but still lag in economic growth. The lesser regional performers Libya and Syria were in 88th and 94th place, respectively. Countries are scored on 12 "pillars" of competitiveness, including infrastructure and technological readiness. Switzerland replaced the US as top country in the latest WEF rankings. rbundhun@thenational.ae
