For the seventh year in a row, Switzerland has been named as having the most competitive economy internationally by the World Economic Forum (WEF). But the study repeated warnings from last year that Switzerland faces a challenge to hold on to its mantle.
Switzerland held on to top spot in the WEF Global Competitiveness Report thanks to top marks in innovation, business sophistication and labour market efficiency. It took top marks in each of these categories out of 140 countries surveyed.
The WEF study is seen as a benchmark of a country’s economic well-being during a highly volatile period in the global economy. Singapore and the United States held on to second and third position in the rankings whilst Germany jumped one place to fourth spot and the Netherlands improved by three positions to reach fifth.
“However, clouds are on the horizon [for Switzerland],” WEF said in a statement.
“The strong franc, zero inflation and negative interest rates will pose challenges to the macroeconomic environment in the future, while uncertainty around immigration policies means that its enviable track record in both attracting and retaining talent (currently 1st worldwide in both categories) also could come under pressure.”
Last year, Swiss voters accepted an initiative aimed at curbing the mass migration of European Union workers. Many multinational companies and business groups have expressed concerns that this could restrict their choice of global talent.
Switzerland is also in the midst of reforming its company tax code whilst relations with the EU are strained in a number of other areas.
A week ago, Switzerland dropped to 10th place from pole position in an HSBC survey of expat workers on the best places to live and work.
The 22,000 expats surveyed by HSBC ranked Switzerland among the lowest countries for ease of integration and ease of making new friends.
In May, Switzerland dropped two places to fourth in the Lausanne-based IMD business school’s annual competitiveness report, in which countries were assessed by 6,000 global executives.
The report’s author, Arturo Bris, told swissinfo.ch that the Swiss National Bank’s decision in January to end its defence of the franc may have knocked confidence in Switzerland’s immediate future.
Worldwide, the WEF report said that there was an urgent need for reform in other countries if the global economy is to move upwards.
“A failure to embrace long-term structural reforms that boost productivity and free up entrepreneurial talent is harming the global economy’s ability to improve living standards, solve persistently high unemployment and generate adequate resilience for future economic downturns,” the report’s authors stated.