By Sarah Townsend
World Economic Forum report ranks UAE in world's top 20 economies, ahead of Qatar and Saudi Arabia
The UAE has been named the most competitive economy in the Middle East and North Africa (MENA) and among the top 20 best performing economies in the world, according to the World Economic Forum (WEF).
The WEF’s 2016 global competitiveness index ranks the UAE 16 out of 138 countries, one place up from last year and top in MENA.
Qatar ranked 18 – two places lower than last year – Saudi Arabia was 29 and Kuwait 38, followed by Bahrain at 48, Jordan at 63 and Oman at 66.
Morocco was 70 in the list, while Algeria ranked 87 and Tunisia 95, according to the WEF.
The report said: “The UAE…continues to lead the MENA region, building on improvements in competitiveness in recent years.
“This year small gains in areas such as technological adoption and business sophistication are partially offset by deteriorating macroeconomic stability that is the result of lower energy prices, which have led to a rise in inflation and public debt and to the emergence of a fiscal deficit.
"Overall, the UAE boasts a number of competitive strengths: infrastructure is top- notch (fourth overall) and goods and labour markets are open and efficient. Going forward, for the country to diversify its economy, enhancing innovation – where the country currently ranks 25th – will be crucial.
"There is equal scope for better leveraging digital technologies that are an important enabler of business innovation. Currently the country ranks 29th in use of information and computer technology.”
Saudi Arabia dropped by four places from last year “mainly as a result of a deteriorating macroeconomic environment”, the WEF said, adding that the kingdom needs to improve the quality of education to build talent.
The report stated: “The country has recently revealed its ambitious economic development programme, which aims at widespread diversification of the economy to reduce dependence on oil by 2030.
“Achieving higher diversification will require building capacities in high-end industries and services sectors. Strengthening education, particularly in terms of the quality of maths and science training but also in management and primary education, will be necessary but so will a more flexible labour market that ensures that talent is used efficiently.
“Significant potential for improvement also exists in financial market development, which remains less stable than in peer economies.”
Overall, Switzerland ranked as the most competitive economy in the world for the eighth consecutive year in 2016, followed by Singapore, the United States, the Netherlands and Germany.
Sweden was ranked 6 and the UK 7 – both rose three places from last year, although the report notes that the UK’s ranking is based on pre-Brexit data.
The remaining three economies in the top ten are Japan, Hong Kong and Finland, which all dropped places since 2015.
“Declining openness in the global economy is harming competitiveness and making it harder for leaders to drive sustainable, inclusive growth,” said Klaus Schwab, founder and executive chairman of the WEF.