The U.S. tumbled further in a ranking of most competitive world economies, dragged down by the weight of President Donald Trump’s trade wars.
After losing the top spot to Singapore in 2018, the U.S. dropped further down the list to 10th place from third, according to an annual ranking from the Institute for Management Development, a business school based in Lausanne, Switzerland. Singapore was the most competitive economy for the second year in a row, followed by Denmark and Switzerland.
The U.S.’s trade war with China has increased uncertainty for businesses, a factor weighing on both countries’ competitiveness. China, the world’s second-biggest economy, dropped six spots to No. 20 on the IMD’s ranking.
“Trade wars have damaged both China and the USA’s economies, reversing their positive growth trajectories,” the IMD said.
The World Economic Forum’s 2019 global competitiveness report also showed Singapore beating the U.S., which moved to the No. 2 spot as trade openness declined.
The IMD’s rankings, which started in 1989, assess 63 economies on hundreds of indicators: a combination of hard data, such as employment, cost of living, and government spending, and soft data from surveys of international business executives on topics including political stability and protection of intellectual property rights.
The top five — Singapore, Denmark, Switzerland, the Netherlands and Hong Kong — show the strength of smaller economies in weathering global risks, the IMD said.
“The benefit of small economies in the current crisis comes from their ability to fight a pandemic and from their economic competitiveness,” Arturo Bris, director of the IMD World Competitiveness Center that compiles the ranking, said in a statement. “In part, these may be fed by the fact it is easy to find social consensus.”
Singapore earned the top spot because of its robust trade and investment, strong education and technology infrastructure, the IMD said. Its regional financial rival, Hong Kong, fell three spots on the ranking to No. 5 amid social unrest and an economic downturn that predated the virus.
By region, Europe secured a strong showing with half of the top 10 economies hailing from the continent. Denmark came in second based on a strong economy, labor market, health and education systems, as well as international investment, productivity and efficiency. Switzerland edged up to third place based on international trade, scientific infrastructure and its health and education systems.
The U.K. climbed four spots to No. 19, which the IMD said could be a sign that Brexit created the perception of a business-friendly environment. Canada moved up to No. 8 from No. 13.
Asia-Pacific economies were weaker than usual, with most slipping from last year’s rankings including a four-spot drop by Japan to No. 34 and Indonesia’s slide by eight notches, to No. 40. India remained at No. 43.
Economies across the Middle East struggled under the weight of the oil-price crisis, with the United Arab Emirates falling four spots to No. 9.