Singapore’s ranking has slipped in the latest global competitiveness rankings compiled by Swiss business school IMD.
According to the annual World Competitiveness Yearbook’s (WCY) ranking, Singapore’s position this year was pulled down by several factors, including inflationary pressure, real growth and real growth per capita, and lower “economic performance” ranking of 9th, down from 5th in 2011.
“What Singapore is struggling with is everything relating to inflation,” stated Hischam El-Agamy, Executive Director of IMD for Southeast Asia, the Middle East, Africa and Southeast Europe.
With regional competitors moving up, Irvin Seah, an economist at DBS, believes the rise in business costs is affecting overall competitiveness, “unless Singapore can improve productivity quickly, which is not easy”.
While cost competitiveness has not been a major selling point for the country, worsening cost conditions would cause concern if the economy stagnates or slips due to other factors such as business and government efficiency as well as infrastructure.
Meanwhile, Hong Kong reclaimed top spot, followed by the US and Switzerland.
A separate global competitiveness ranking published by the World Economic Forum in September last year showed that Singapore beat Sweden to take second spot, just behind Switzerland.
Though higher costs stemming from stricter quotas and higher foreign worker levies may affect competitiveness standings for 2013, Barclays Capital economist Leong Wai expects government policies to drive “a necessary structural adjustment the economy has to undertake to reach a new level of competitiveness”.
“The ability to make strategic decisions over the long term without worrying too much about security, political uncertainty, policy discontinuity, solid connectivity and social upheavals – these are far more important factors driving long-term investments.”
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