Archive for June, 2009

I M D – World Competitiveness Yearbook 2009 “Stress Test” for tough times…

June 1, 2009

As member of the input panel for the IMD World Competitiveness Yearbook, Danish Business Economists are granted access to the very first results from the 2009 survey, which for the first time includes a Stress Test of the 57 most developed economies focusing on their ability to recover from the actual economic situation.

Stress Test on Competitiveness 2009:

Denmark finishes in first place in the rankings of the Stress Test, an analysis of which countries are better equipped to fare through the crisis and improve their competitiveness in the near future. In other words, the test is future oriented – it focuses on readiness and resilience in a period of world recession. The succeeding 4 places are taken by Singapore 2nd, Qatar 3rd, Norway 4th, Hong Kong 5th.

Although the economic forecasts are still weak this year, Denmark finishes first in part because of the strong resilience of business and government, and the long-established stability of its society – combined with low public debt and unemployment rate.

In short, the Stress Test shows that smaller nations, which are export-oriented, resilient and with stable socio-political environments are better equipped to benefit immediately from the recovery.

It underlines that dimensions such as flexibility on the labour market, trustworthiness of managers and political stability are extremely important to secure readiness for change, which is of key importance for a successful recovery from the actual economic situation.

However, only the good performance of the very large exporters such as the US, Germany, China or Japan will send a credible message to the world that the worst is over – a change that everybody will be able to believe in.

Despite finishing first in the overall World Competitiveness Yearbook rankings, the United States finishes 28th in the Stress Test, underlining the concern of the market with the depth of the crisis and the time that it will take to solve it.

The UK 34th, is in a disquieting position, just as France 44th, Italy 47th and Spain 50th stressing how much the recovery in these countries may be hampered by structural rigidities. Finally Russia in 51st position may not have had enough economic growth to consolidate for coping with a crisis of this magnitude.

For further briefing on above WCY-extracts and additional information, please check:

www.imd.ch/wcy

www.worldcompetitiveness.com/online

Povl Tiedemann

May 2009

NB: In short – The World Competitiveness Scoreboard 2009 results comprises the traditional overall ranking of the 57 economies covered by the World Competitiveness Yearbook. It shows only few movements (compared with 2008) with the US still in first place followed by Hong Kong (3), Singapore (2), Switzerland (4) and Denmark (6) – the numbers in brackets indicate the 2008-placements. All of the Nordic economies have increased or maintained their rankings compared to the US: Denmark improves one rank to 5th, Sweden moves up 3 places to 6th, and Finland,  a huge bound from 15th to 9th place. Norway maintains its 11th position.

 

Note:

These are the future-oriented criteria included in the Stress Test:

 

1. Economy Forecasts/Perspectives

Forecast: Real GDP Growth

Forecast: Inflation

Forecast: Unemployment

Forecast: Current account balance

Resilience of the economy

 

2. Government

Management of public finances

Legal and regulatory framework

Adaptability of government policy

Bureaucracy

Government decisions

 

3. Business

Ethical practices

Credibility of managers

Corporate boards

Corporate values

Entrepreneurship

 

4. Society

Risk of political instability

Social cohesion

Flexibility and adaptability

Attitudes toward globalization

Need for economic and social reforms

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