Switzerland has slipped down a slot in the annual Global Competitiveness Indexexternal link from the World Economic Forum (WEF)external link.

Having come in fourth in 2018, Switzerland now follows Singapore, the United States, Hong Kong and the Netherlands. The index covers 141 countries. The world economy is not ready for a major slowdown, warns WEF.

“Ten years on from the global financial crisis, productivity has stagnated in spite of trillions of dollars being injected into the economy. With monetary policy now running out of steam, the Forum urges fiscal policy and public incentives to focus on productivity enhancing investments such as research and development, skills and training and other infrastructure for innovation-led growth,” stated the report released on Wednesdayexternal link.

Strengths

As the second most competitive economy in Europe, Switzerland ranks in the top ten in eight of the index’s 12 pillars. It topped the lists for “active labour market policies” and “linking pay and productivity”.

“Switzerland is the world leader when it comes to skills, with the most extensive and highest quality staff training as well as highest skillset for graduates,” stated the report, adding that the nation ranks first when it comes to international co-inventions, and third at R&D expenditure per capita.

Weaknesses

The areas for improvement are “complexity of tariffs” (141st) and “conflict of interest regulation” (133rd), plus the tax rate on labour (74th). Other weak points cited were a lack of diversity (21st) in the workforce and the “declining prominence" of its research institutions (20th).

Another factor dragging the score down was moderate business dynamism. “Cutting time to start a business (59th – compared to Rwanda on 14th) would help its overall score,” pointed out the report.

Past master

From 2009-2017, Switzerland had placed first in the index under another methodology. The index is now in its fourth iteration. 

“The Global Competitiveness Index 4.0 provides a compass for thriving in the new economy where innovation becomes the key factor of competitiveness. The report shows that those countries which integrate into their economic policies an emphasis on infrastructure, skills, research and development and support those left behind are more successful compared to those that focus only on traditional factors of growth,” said Klaus Schwab, Founder and Executive Chairman of the World Economic Forum, which brings business and political leaders from around the world to Davos, Switzerland, every winter.

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