U.S. =
Displaced by=20
Switzerland as Most Competitive (Update1)
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By Simon Kennedy and Klaus Wille
Sept. 8 (Bloomberg) -- The U.S. was displaced by =
Switzerland as=20
the world=E2=80=99s most-competitive economy after its =
financial markets=20
were roiled by the worst crises since the Great Depression, =
the World Economic Forum said today.
The U.S. fell to second position for the first time since =
the=20
Geneva-based organization began its current index in 2004 as =
it lost=20
marks for the sophistication of its markets and rising =
budget=20
deficits. Switzerland was credited for its stability and =
ability to=20
innovate.
=E2=80=9CA number of escalating weaknesses have taken =
their toll on the=20
U.S. ranking this year,=E2=80=9D the study of 133 countries =
ny the=20
Geneva-based organization said. =
=E2=80=9CSwitzerland=E2=80=99s performance has=20
remained relatively stable.=E2=80=9D
The loss of efficiency by the world=E2=80=99s largest =
economy is another=20
obstacle to a fast recovery even as it begins to show signs =
of=20
emerging from its deepest recession since World War II.
Reduced confidence in its banking system after the =
collapse a=20
year ago of Lehman Brothers Holdings Inc. meant the U.S. =
slid to=20
ninth from 20th when ranked for the attributes of its =
markets. A=20
measure of how easy access to finance is fell to 106th this =
year,=20
close to Albania and Mali, from 40th last year, while a =
budget=20
deficit now above $1 trillion pushed its grade for economic=20
stability to 93rd from 66th.
U.S. Faces Obstacles
The U.S. economy still won marks for its flexible product =
and=20
labor markets, research and development and technological =
advances.=20
=E2=80=98These factors remain a driving force behind U.S. =
productivity and=20
will support recovery from the current recession,=E2=80=9D =
the forum said.=20
The U.S. economy may be slow to pull out of its slump as =
data=20
suggest obstacles to expansion remain. While the economy =
lost the=20
fewest jobs this year in August, unemp=
loyment=20
climbed to a 26-year high, a U.S. Labor Department report =
showed=20
Sept. 5.
Switzerland took the top spot after being ranked third in =
the=20
world for business sophistication and second for its =
capacity to=20
innovate. Its economy was ranked 17th for stability.
Recent indicators show the Swiss economy is emerging from =
its=20
worst recession in three decades. Gross domestic product cont=
racted=20
0.3 percent in the second quarter from the previous three =
months,=20
less than economists expected. Exports rose in July after =
falling=20
for two months and investor confidence jumped to a =
three-year high=20
in August.
Returning to Growth
=E2=80=9CSome months ago, uncertainty was much higher and =
I expected=20
worse=E2=80=9D said Ursina=20
Kubli, an economist at Bank Sarasin in Zurich. =
=E2=80=9CBut given these=20
latest data, it looks as if the economy is stabilizing on a =
solid=20
level. I expect the economy to expand again in the third =
quarter.=E2=80=9D=20
Singapore, Sweden and Denmark rounded out the top five, =
followed=20
by Finland, Germany, Japan, Canada and the Netherlands. =
Among the=20
other Group of Seven nations, the U.K. slipped one slot to =
13th,=20
France held at 16th and Italy rose a place to 48th, although =
remained below Barbados in 44th.
China climbed one place to 29th, while India and Brazil =
also=20
gained to 49th and 56th respectively. Russia fell 12 places =
to 63th=20
because of concern about the government=E2=80=99s growing =
role in its=20
economy and the independence of its justice system. In Latin =
America, Chile was the highest placed ranking 30th and Qatar =
outpaced its Middle East counterparts coming in at 22nd. =
Governments should be wary of not taking steps to fortify =
their=20
economies even once the crisis passes, said Xavier=20
Sala-i- Martin, an economics professor at Columbia =
University in=20
New York, who helped write the report. The International =
Monetary=20
Fund now expects the world economy to grow 2.9 percent next =
year=20
rather than 2.5 percent it predicted in July.
=E2=80=9CIt is critical that policy makers not lose sight =
of long- term=20
competitiveness fundamentals amid short-term =
urgencies,=E2=80=9D said=20
Sala-i-Martin. =E2=80=9CA competitiveness-supporting =
economic environment=20
can help national economies to weather business cycle =
downturns.=E2=80=9D=20
To contact the reporters on this story: Simon=20
Kennedy in Paris at skennedy4@bloomberg.net=20
Last Updated: September 8, 2009 05:44 EDT
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