The WEF may have its own method of measuring the competitiveness
of each country but its rankings defy the stark reality of what is going
on in the world.
BANGKOK: The World Economic Forum (WEF) has just issued its Global Competitiveness Index 2012-2013 rankings.
Thailand’s
competitiveness ranking has improved slightly to 38th spot this year,
while Switzerland has edged out Singapore to become the most competitive
nation on earth.
The WEF has its own formula in ranking the competitiveness of each country. However, the WEF’s ranking does raise some eyebrows.
According to the WEF, Spain is more competitive than Thailand because its overall ranking is 36th. This ranking is questionable.
Spain
is planning to seek a full bailout from the European Union. The
European Central Bank is about to monetise its debt. It has received
€100bil (RM393.7bil) in bailout funds already. Some €75bil (RM295.3bil)
in deposits have fled the Spanish banking system.
Spain is in a
similar situation to Thailand in the first part of 1997 before Thailand
sought a bailout from the International Monetary Fund. By this measure,
Spain should not get a ranking higher than Thailand.
Switzerland,
ranked No.1, will not enjoy its position as an oasis of peace and
prosperity in Europe for too long in the event of a euro implosion.
Swiss banks’ assets, which are tied to the European banking crisis, are
more than 300% of the country’s GDP.
The United States has
slipped to 7th in the rankings. The US economy is in big trouble. Some
46 million Americans are on food stamps. There are 10 million Americans
unemployed, including another 12 million who are doing odd jobs.
Some
18 million American households are having a tough time making ends
meet. The banking system is in shambles. The US national debt has hit
US$16tril (RM49.7tril), or about 100% of the GDP. The budget deficit is
chronic. The country is years away, if ever, from being able to balance
its budget.
Most important, the Federal Open Market Committee
will meet on Sept 12 to determine whether it will go ahead with a
bond-buying programme, or QE3, to further prop up the financial system.
US finances are in very bad shape indeed.
Japan is ranked in 10th
spot. Does it deserve this position? The whole world knows that Japan
has the world’s largest public debt at more than US$12tril (RM37.3tril),
or 230% of its GDP. Japan’s debt is largely financed by domestic bonds.
But with an ageing society, Japan will face higher interest costs from
its borrowing, which will put the health of its finances into further
question.
The Japanese economy is far from recovering from its
crisis of the 1990s. Japan is facing sluggish growth and also high
energy costs in the aftermath of the Fukushima nuclear plant disaster.
Its
export sector is feeling the pinch from the strong yen. If the consumer
markets in Europe or US were to slacken even more, Japan’s export
machines will wobble. Foreign exchange earnings will plunge, while
domestic demand has been in a weak state all along.
Saudi Arabia,
ranked at 18th, is the world’s largest oil exporter. But a Citibank
report issued last week said Saudi Arabia might have to import energy by
2030 if the current pace of domestic consumption and exports continues.
Israel
is ranked 26th, though it is facing off against Iran in the Middle
East. A war could break out between the two countries at any time, given
the tensions between their leaders.
China is ranked 29th,
although it is the richest country in terms of foreign exchange
reserves. Its reserves stand at US$3tril (RM9.3tril). China is the
world’s production factory. Its economy is the world’s second largest
after the United States. It is improving fast in technology and
innovations.
Moreover, China is also building up its military and
has nuclear weapons in store. Apparently, China does not deserve this
relatively low ranking.
This also applies to other Brics
countries such as Russia (67th), Brazil (48th) and India (59th). How is
it possible that the Philippines musters at 65th, two notches higher
than Russia, which is still a superpower, rich with resources? The
Philippines is vulnerable to food price increases and also to natural
disasters.
The WEF may have its own method of measuring the
competitiveness of each country. But its rankings defy common sense and
the stark reality of what is going on in the world.
From a group of leading Asian newspapers working towards improving coverage of Asian affairs
http://www.asianewsnet.net/