U.S. Economy Still Most Competitive Despite Crisis, WEF Says

By Simon Kennedy

Oct. 8 (Bloomberg) -- The U.S. retained the title of most competitive nation for a fifth year even as its economy is roiled by the biggest financial crisis since the Great Depression, the World Economic Forum said.

The U.S. led Switzerland, Denmark and Sweden in the Geneva- based organization's annual rankings of 134 nations, receiving top marks for innovation, the size of its markets and labor productivity.

The efficiency of the world's largest economy may provide it with a cushion as it slides towards a recession and its banking sector continues to be hurt by last month's collapse of Lehman Brothers Holdings Inc. The U.S. government is beginning to implement a $700 billion finance-rescue package.

``Despite rising concerns about the soundness of the banking sector and other macroeconomic weaknesses, the country's many other strengths continue to make it a very productive environment,'' the report said of the U.S.

The U.S. was still ranked only 66th for macroeconomic security with the forum warning its overall productivity may wane in coming years because its federal budget deficit and debt suggest it is ``not preparing'' for the retirement of the baby boom generation.

Singapore, Finland, Germany, the Netherlands and Japan rounded out the top ten as they did last year with Canada's replacement of the U.K. the only change in the main tier.


U.K. Weakness

Canada was promoted from 13th because of its transport and telecommunications infrastructure, while the U.K. fell to 12th from ninth because of growing weakness in financial services following government bailouts of Northern Rock Plc and Bradford & Bingley Plc.

The World Economic Forum, funded by more than 1,000 corporations and best known for its annual conference in the Swiss ski-resort of Davos, has published competitiveness reports since 1979. The rankings include marks for over 110 variables including quality of education, health care and innovation.

Among the other Group of Seven industrial nations, Germany followed the U.S. although its ranking slipped to seventh from fifth as its labor markets remain rigid. Japan fell one place to ninth, dragged down by its sluggish economy and high public debt.

France rose to 16th from 14th, winning credit for having the second best infrastructure in the world. Italy fell below Barbados to 49th from 46th as its inflexible labor market and wasteful government spending hinder competitiveness.

Most of the largest emerging markets gained ground on their richer rivals, with China joining the top 30 for the first time.

A boom in oil revenues lifted Russia to 51st from 58th, while India dropped two places to 39th as its widening budget deficit offsets its business sophistication. Brazil jumped eight slots to 64th after improving its public finances.

To contact the reporters on this story: Simon Kennedy in Paris at skennedy4@bloomberg.net