Singapore has overtaken the US to claim the top spot in the World Economic Forum's Global Competitiveness Report 2019.
The annual competitiveness report showed Singapore dethroning the US, the worlds largest economy, to second place this year by scoring top marks for its infrastructure, health, labor market and financial system. The report stated that while the US lost to Singapore overall, "it remains an innovation powerhouse."
The index grades an economy's competitive landscape based on different factors, including macroeconomic stability, infrastructure, the labor market and innovation capability. The strong performances of Singapore and Vietnam have been partly attributed to the US-China trade war.
Vietnam improved its ranking by 10 spots to settle at 67th out of 137 countries as US imports from the country surged by 36% in the first five months of 2019 as companies shifted their manufacturing operations from China to Vietnam and other Southeast Asian countries to avoid high tariffs.
Despite its high competitive ranking, Singapore has lowered its GDP growth forecast in August after it reported a decline in economic activity in the second quarter of this year. It looks to be the country's weakest annual growth since the 2009 global financial crisis. Singapore heavily relies on exports and China is its largest trading partner.
Joining Singapore and the US in the global competitiveness top five were Hong Kong, the Netherlands and Switzerland. Despite the political crisis, Hong Kong ascended four spots to number three due to its macroeconomic stability and financial system.
The remaining countries that completed the top 10 list were Japan, Germany, Sweden, United Kingdom, and Denmark.
The report warned that the increase in trade and geopolitical tensions "are fueling uncertainty" globally. It added: "This holds back investment and increases the risk of supply shocks: disruptions to global supply chains, sudden price spikes or interruptions in the availability of key resources."
