The IMD World Competitiveness Center has released its 2026 ranking, evaluating 70 global economies. Singapore has ascended from second place in 2025 to claim the top position this year. Hong Kong, China, ranks second globally, while Switzerland has fallen two spots to third, relinquishing its champion status. Mainland China and the United States are ranked 12th and 10th, respectively.
China's ranking improved from 16th to 12th, with the key driver being enhanced business efficiency. The director of the IMD World Competitiveness Center noted that China's domestic economic performance is very robust, with particularly outstanding showings in productivity and the labor market, and significant improvements in several other areas.
Steady Ascent for China's Competitiveness
The professor highlighted that China's competitiveness ranking among the 70 economies has risen to 12th. He observed that China's climb is rapid and that both China and the US are expected to be within the global top ten for competitiveness in the future. The primary factor behind China's progress is business efficiency, reflected in improved productivity and operational efficiency, a better financial environment, and stronger labor market performance.
In this year's ranking, Hong Kong, China, rose to second place, marking its third consecutive year of improvement and further solidifying the dominance of Asian economies at the top of the list. The IMD expert pointed to two core factors for Hong Kong's competitiveness: first, the institutional stability it provides attracts capital inflows; second, it maintains a dominant position in financial markets, evidenced by IPO market performance and substantial capital inflows.
He also noted that as capital flows out of the US in search of safer environments, markets like Singapore and Hong Kong, China, have dominated regional capital attraction from 2025 to 2026. The professor stated that global competitiveness in 2026 is increasingly a competition of "institutional credibility," where predictable rules, enforceable commitments, and governance capabilities are paramount, especially in a fragmenting world.
Top Performer Stumbles: The Troubles of Wealthy Nations
The most discussed aspect of the ranking is Switzerland's two-spot decline, primarily due to a significant deterioration in its "economic performance" metric, which plummeted 24 places to 37th. In the "Prices" sub-indicator, Switzerland ranked only 66th. The strong and expensive Swiss franc, coupled with high living costs, dragged down its scores.
At a press conference, the head of the Foreign Economic Affairs Directorate at Switzerland's State Secretariat for Economic Affairs was repeatedly asked if the Swiss economy had a problem and whether the Swiss people had "become lazy." He responded directly, stating, "No, we have not become lazy."
He argued that the issue is not laziness but a more challenging external environment. While acknowledging the impact of tariff measures, he considered them temporary, with many high tariffs being gradually reduced through negotiations. Regarding the sharp drop in the "economic performance" indicator, he noted this is not a new phenomenon but a trend persisting for years, largely linked to volatile foreign direct investment flows in the financial and holding company sectors around 2015 and post-2019-2020.
He also acknowledged pressure on Swiss economic growth, with 2026 growth expected below the long-term average at about 1%, and a projected rebound to 1.7% in 2027. He noted that, like other European nations, Switzerland faces growth slowdowns and competitiveness pressures due to geopolitical factors. However, he emphasized that Switzerland is not standing still, pointing to a comprehensive reform package approved in November 2025 aimed at boosting competitiveness, attractiveness for investment and labor, and productivity, alongside reducing regulatory burdens on businesses.
He expressed hope these efforts would improve employment data and reignite job growth. Despite the slight ranking drop, he affirmed that Switzerland remains one of the world's most competitive countries and a highly attractive investment destination.
AI Mitigates the 'Small Country Disadvantage'
In this year's ranking, Singapore reclaimed the top spot it held in 2024. A senior vice president at the Singapore Economic Development Board stated that for a small, highly open economy like Singapore, competitiveness no longer depends solely on cost advantages and economic scale.
He highlighted three key competitive factors for Singapore. First is "connectivity," positioning Singapore as a hub linking businesses to global markets, regional opportunities, and international value chains. Second is its industrial ecosystem, with active development in growth areas like the bio-economy, quantum technology, space industry, and AI. Third is talent, which remains Singapore's most critical strategic resource given its limited natural resources. He added that Singapore welcomes global talent to complement its local workforce.
For the United Arab Emirates, which ranked fifth for the second consecutive year, the Director General of the Federal Competitiveness and Statistics Centre emphasized that artificial intelligence is weakening the "small country disadvantage." She stated that national competitiveness is no longer entirely constrained by population size and land area, allowing many countries to enhance their capabilities and competitive advantages without expanding their populations.
She noted that non-oil economic activities now constitute nearly 80% of the UAE's economy, a result of decades of investment in economic diversification and future industries. While acknowledging that current geopolitical conflicts mainly impact shipping logistics, energy, and export-oriented activities, she asserted the UAE's economic fundamentals remain robust, with 2025 GDP growth at 6.2% and non-oil growth at 6.8%. Her experience shows that the more diversified, globally connected, and institutionally sound an economy is, the more resilient it is to external shocks.
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