SINGAPORE, June 17 — Singapore has retained its position as the world’s most competitive economy for the second year running in the latest yearly report by the IMD World Competitiveness Centre, a Switzerland-based think-tank.
Singapore wrested the top spot from the United States last year. Before that, the last time Singapore was ranked the most competitive economy was in 2010, even though it was consistently among the top three.
The US, which was third last year after topping the rankings in 2018, fell seven more spots to 10th position this year.
The rankings were based on four categories: Economic performance, government efficiency, business efficiency and infrastructure.
In the latest report, the results were derived from responses in the first quarter of this year from business executives on questions about how they perceive their country’s economy, as well as “hard data” from 2019, the think-tank said in a statement yesterday.
Responding to TODAY’s queries, the think-tank’s senior economist Jose Caballero noted that most of the international statistics do not capture the impact of Covid-19, but the business confidence survey was carried out in the thick of the pandemic.
“These survey data show, however minimally, that in dealing with the crisis, the adaptability of governments to changing circumstances, the transparency of policymaking and bureaucratic effectiveness in implementing those policies play a fundamental role,” said Dr Caballero.
“Also, political stability and social cohesion has been important in minimising the uncertainty generated by the crisis and to address the changing health needs emerging from the pandemic.”
The think-tank said that Singapore’s robust international trade and investment environment as well as its employment and labour market policies were factors behind its strong economic performance.
The education system and technological infrastructure supporting telecommunications, internet speeds and high-tech exports also played key roles.
Apart from Singapore, Denmark, Switzerland, the Netherlands and Hong Kong are the other economies that make up the top five in the 2020 rankings. This is a reflection of the strength of many small economies, the think-tank said.
It added that the US-China trade tensions have reversed the positive growth trajectory of the world’s two largest economies.
Mirroring the US’ decline in competitiveness, China dropped six places to 20th position this year.
Commenting on the rankings yesterday, Trade and Industry Minister Chan Chun Sing said on the sidelines of a media event that the significant changes in the relative rankings of many economies show that “we are living in a very volatile environment”.
“We cannot and should not be complacent. Some of the factors can change very rapidly, the stability of our country, the consistency of its rules, the unity of its people, the connectivity with other parts of the world, these are factors that can change very quickly if you are not careful with our posture,” he added.
What it means for Singapore
Dr Caballero said that Singapore’s stability places it in a privileged position, and the country may find it easier to tackle the challenges that would come in the post-Covid-19 phase.
But he cautioned that if a second wave of infections hits Singapore, which will reopen virtually its entire economy on June 19, the country’s economy would suffer further, leading to more job losses and a drop in income levels, consumption and companies’ profitability. This will eventually have a negative impact on Singapore’s economic performance and competitiveness.
“By increasing economic uncertainty, the recession may (have) long-term effects also on investment levels and the resilience of the economy,” Dr Caballero added.
He also noted that high office rents, high electricity costs, an elevated cost of living as well as a lack of energy production from renewable sources are some areas that Singapore can improve on.
When asked how Singapore can improve on these areas, Chan said the country would not be able to compete with countries that have an advantage in natural resources and manpower.
Instead, it has to compete on what he considers “intangibles”, such as having a strong rule of law, protection for intellectual property and a skilled workforce.
“So the strategy is actually quite simple. We strengthen our intangibles that distinguish us, yet at the same time manage the rest of the things that are beyond our control,” Chan added. — TODAY