South Africa now more competitive than India – WEF rankings
South Africa has boosted its position in the annual World Economic Forum's annual Global Competitiveness Report, which ranks economies according to their ability to provide prosperity to their citizens, and how productively a country uses its resources.
After being judged the 67th most competitive economy in 2018, SA rose seven places to 60 in 2019, to beat fellow Brics members India (which fell 10 places to number 68, in part due to poor health conditions) and Brazil (71st). China (24th) and Russia (43rd) remain well ahead.
The WEF’s annual report, which has been issued since 1979, scores countries according to their institutions, infrastructure, ICT adoption, macroeconomic stability, health, skills, product market, labour market, the financial system, market size, business dynamism and innovation capability, and also surveys more than 13,000 business executives for their views.
It found that South Africa’s competitiveness regained momentum after “the recent political landscape shift”, evidently referencing incoming president Cyril Ramaphosa.
SA’s “well-developed” equity, insurance and credit markets all achieved a perfect score of 100. The financial sector as a whole was rated 19th most competitive out of 141 countries. Scores on health improved, with 3.3 years added to the average healthy life expectancy since the last assessment.
The country’s “institutional quality” also improved, with “remarkable progress” in some areas – including when it comes to the balance of powers across different state’s entities, which now ranks 16th in the world. South Africa also improved its ratings on administrative efficiency of the public sector (+6.3 places to 39th) and corporate governance (+3.3, 26th).
But the WEF remains concerned about security (SA ranks 135th out of 141 countries), while transparency (62nd) and government adaptability to change (100th) are also below par.
South Africa's rankings on various measures, according to the WEF.
“Further, South Africa’s competitiveness is being held back by relatively low business dynamism (61.9, 60th), which is inhibited by insolvency regulation and administrative burdens to start a business, and a persistently insufficient labour market flexibility (52.1, 111th). For instance, flexibility of wage determination is limited (41.1, 134th) and hiring foreign labour is difficult (40.6, 123rd). South Africa’s sensitivity to exports of mineral resources is likely to hit the country’s economic outlook and will make reducing unemployment (projected above 27%) challenging.”
Against this backdrop, structural reforms are needed to re-ignite the economy, the WEF said.
With a score of 84.8 (+1.3), Singapore is the world’s most competitive economy in 2019, overtaking the United States, which falls to second place. Hong Kong (3rd), Netherlands (4th) and Switzerland (5th) round up the top five.
According to the report, South Africa is the second most competitive economy in Africa after the island nation of Mauritius.