America still ranks number one as the most competitive country in the world, despite being rocked by the Wall Street credit crisis. For the fifth year running, the US topped the World Economic Forum's (WEF) annual survey ahead of Switzerland, Denmark and Sweden. The US received maximum marks for innovation, the size of its markets and labour productivity.
According to the WEF, the efficiency of the world's largest economy will provide a cushion as it slides towards a recession. Fallout from America's credit crunch is starting to filter down to the main economy with growth stalling, unemployment rising and consumer confidence falling. After the collapse of Lehman Brothers last month and weeks of market turmoil on Wall Street, the US government launched a US$700 billion (Dh2.57 trillion) rescue package. But that has so far failed to calm fears among investors.
"Despite rising concerns about the soundness of the banking sector and other macroeconomic weaknesses, the country's many other strengths continue to make it a very productive environment," the report said of the US. Thierry Geiger, a WEF economist, pointed out that the US excelled in its "capacity to innovate, the quality of its institutions, the efficiency of government in relation to expenditure, the independence of the judiciary, low levels of corruption and the flexibility of the goods and labour markets".
"The United States is well placed to bounce back from the crisis," Mr Geiger said. "New York will be New York again, the money and the know-how will still be there. The US is still the future." But America was still ranked only 66th for macroeconomic security, with the forum warning its overall productivity may wane in coming years because its federal budget deficit and debt suggest it is "not preparing" for the retirement of the "baby boom" generation.
Singapore, Finland, Germany, the Netherlands and Japan made up the top 10, as they did last year, with Canada replacing the UK. Britain fell to 12th from ninth because of growing problems in financial services following government bailouts of Northern Rock and Bradford & Bingley. The survey reported that the UK's greatest weakness was its macroeconomic environment, ranked 58th, as a result of low national savings, a growing public sector deficit and increased public debt. But the WEF said the UK's strengths included its flexible labour market, which was ranked eighth.
"Notwithstanding the recent financial crisis, the United Kingdom's financial markets continue to be assessed as among the most efficient in the world, although they have slipped from second to fifth place since last year in this area, amid rising concerns among the business sector about the soundness of banks and the ease of access to various forms of capital," the report said. The WEF, which is funded by more than 1,000 corporations and best known for its annual conference in the Swiss ski-resort of Davos, has published reports on competitiveness since 1979. The rankings include marks for more than 110 variables including quality of education, health care and innovation.
China continued to top the rankings among the major developing economies, improving four places this year and joining the top 30. China's fellow BRIC economies - Brazil, Russia and India - were all in the top half of the table. "Rising food and energy prices, a major international financial crisis and the related slowdown in the world's leading economies, are confronting policy-makers with new economic management challenges," said Xavier Sala-i-Martin, a professor of economics at Columbia University and co-author of the report.
As for the global overview, the WEF reported that the credit crisis, and rising food and energy prices, would cut into economic growth across the world. "Today's volatility underscores the importance of a competitiveness-supporting economic environment that can help national economies to weather these types of shocks in order to ensure solid economic performance going into the future." * with agencies
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